Comparing Fees and Services – Daily Valuation DC Plans Joseph B. Boyle, MSPA Sales Consultant – Mid-Atlantic Region

Agenda Current Fee Environment Plan Participants’ Concerns What Do Plan Sponsors Want From a Service Provider? What Do Advisors Want From a Service Provider? Types of Plans BPAS can handle on our Daily Platform Pricing Example Questions

Current Fee Environment 408(b)(2) requirements – became effective 7/1/2012 On 3/12/2014, DOL released Version 2…becomes effective 12 months after finalized Plan Fiduciaries must be provided Description of all services provided Disclose indirect (12b-1 and sub-ta fees) and direct compensation Must be updated annually or when fee changes occur Fee Transparency and Simplicity Some vendors more clear than others Marketplace and regulators will punish confusion “Guide Requirement”

Current Fee Environment “Guide Requirement” Purpose is to improve understanding Enable Fiduciary to “quickly and easily find” all information required Fee fairness across all assets ERISA Recapture Accounts They are legal but BPAS considers them unfair Recent fee litigation underscores this point (ABB legal case) Benchmarking across all service providers Financial Advisor Recordkeeper, TPA and Custodian Investment Management

What Americans Worry About Most Age Group 18-29 30-49 50-64 65+ Not Enough Money for Retirement 52% 68% 72% 42% Not paying serious illness 52% 63% 63% 50% medical bills Not maintaining standard of living 46% 51% 61% 42% Not paying regular medical bills 39% 48% 51% 35% Not paying normal monthly bills 40% 42% 44% 31% Not paying children’s college 42% 59% 29% 7% Not paying rent or mortgage 38% 39% 39% 19% Not paying credit card bills 16% 21% 22% 14% Source – Gallop Economy and Personal Finance Survey (April, 2013)

Services Plan Sponsors Want Total Retirement Outsourcing HR Outsourcing 3(16) Fiduciary Services 3(38) Plan Design Consulting and Administration Competitive Fees CFO and DOL

Services Plan Sponsors Want Single Point of Contact for all Administrative Services All transactional processing handled by a third party Loans, Hardships, Payouts 180 / 360 payroll integration with recordkeeper Better designs to bring better results for the participant HR and the CFO have different priorities…both must be accommodated

Services Advisors Want Satisfy all the Plan Sponsor requirements Plan Analytics to help advisors evaluate success metrics GAP Analysis Reports Investment Reports linked to IPS Resources Education and Communication Web Tools Knowledgeable experts Strong Design Capability

Services and Features Resonating and Gaining Steam Automatic Enrollment and Escalation Reduces demand for on site education meetings Increases participation and savings rates Improves ADP testing Results Frees up advisor to provide holistic financial planning Support to reduce leakage Retention of assets related to terminated participants EGTRRA IRAs Reduces notice requirements On DB side, lowers PBGC premiums May lower counts so no audit is required

Plans Types on our Daily Platform All 401(k)s …benefit driven or tax oriented 403(b)s including multiple vendor arrangements Multiple Employer Plans (Open, Closed and METs) KSOPS and ESOPS Taft-Hartley Plans and Prevailing Wage Plans 457(b), 457(f) and 409(a) Plans LOSAPs (Length of Service Award Programs) 1081 Puerto Rico Plans IRAs Defined Benefit and Cash Balance Plans

Pricing Example & Comparison between Incumbent vendor and BPAS BPAS won Plan 10/1/2013, converted 1/1/14; Plan Assets of $10.7 million and 375 participants Incumbent (Insurance Company and TPA Service Model) Annual Base Fee $ 5,785 or 0.05% Account Fee Admin Asset Fee $63,130 or 0 .59% Advisor Fee $26,750 or 0.25% Cost of Funds* $41,730 or 0.39% All-in cost $137,395 or 1.28% BPAS (Serving as Custodian, Recordkeeper and TPA) Annual Base Fee Waived Account Fee ($36) $13,500 or .12% Admin Asset Fee $21,400 or .20% Advisor Fee $32,100 or .30% Cost of Funds* $29,456 or .28% All-in cost $96,456 or .90% Note: Revenue from Insurance Company Stable Value not included. Benchmarked Fees: 2014 401(k) Averages Book (All-in Cost) $10,000,000 in assets and 1,000 accounts – 1.39% on assets $10,000,000 in assets and 200 accounts – 1.14% on assets $10,000,000 in assets and 375 accounts – 1.20% on assets (estimated)

How to Rate a Service Provider Is the total number of plans they service important? Breadth of plan type capacity? How important is brand name? If free education meetings are built in all pricing anywhere/anytime…is that a concern?

How to Rate a Service Provider How important is: Robust plan design and administrative capabilities so plans are setup to support client objectives without service capability limitations? Competitive pricing and complete fee transparency? Commitment to independent advisor service model? Knowledgeable and up-to-date workforce on qualified plan rules? 3(16), 3(38), capability with a mindset to go “Green?” Ability to create CIFs as a way of handling model portfolios more efficiently? Commitment to benchmarking and delivering services that generate value-added services for Plan Sponsors?

Questions?

Contact Joe Boyle BPAS Sales Consultant jboyle@bpas.com