1. Investment Outsourcing

2. Plan Sponsor Fiduciary Risk is Significant
Regulator Penalties & Litigation Settlements
Regulatory Action by the Numbers
ERISA Settlements Can Involve Significant Dollars2
Fee Settlements Are Especially Costly3
$823.2 million1
The amount reimbursed to benefit plans and participants based on DOL investigations in 2014
3,9281
The number of civil investigations the DOL closed in 2014
65%1
The percentage of those investigations resulting in monetary compensation or other corrective action
37%4
Of retirement committee members identify their roles as non-fiduciaries
$140
Median Settlement: $15M
DESIGN NOTE:
There should actually be one additional diamond on the Fee Settlements chart at the 14 year and $140 mark. Can we modify but keep the chart to a reasonable size?
Sources: 1www.plansponsor.com/dol-explains-drop-in-2014-collections-number/, Annual Workplace Class Action Litigation Report: Edition, Seyfarth Shaw LLP, Stuck in the Mud or Road to Success? DC Plans and Fee Lawsuits, Callan, Allicance Bernstein, 2015

3. Fulfilling Duties May Require Significant Time Commitments1
SCALE
Lockton has the resources to conduct this process for nearly 1,000 clients
On-going Monitoring
8 Hours
Individual investment product evaluations to identify underperformers, estimate likelihood of recurrence and research alternatives if replacement is needed
Market Assessment
20 Hours
Understanding the economic drivers to evaluate past performance and set future expectations
78 Hours of Work
Every 3 Months
Manager Interviews
34 Hours
In depth discussion with individual money managers to gauge value added strategies driving outperformance or failed bets responsible for underperformance
Product Sleeve Review
16 Hours
Reviewing asset classes (size, value or growth orientation, equity or fixed income, international or domestic, etc.) to establish norms for individual product evaluation
1Source: Lockton Retirement Services, based on an assumed 16-fund option plan with additional Target Date options.

4. Four Steps to Building Fiduciary Confidence1. 3.
Establish an Investment Policy
Document Committee Decisions
Objectives
Standards
Decision-making process
Additions
Replacements
Rationale 2.
Monitor Using Defined Institutional Processes 4.
Get Help
from a Partner
DESIGN NOTE:
Please feel free to choose alternative iconography. Whatever is chosen, please be sure that the imagery is consistent and brand compliant coloring
Data
40 quarters of rolling returns
On-going meetings with managers & trading teams
Prudent expert
Co-fiduciary
Analysis
Modern portfolio statistics
Quality
Manager consistency and strength

5. Lockton Partners With Clients as an Investment Fiduciary
Investment selection and oversight services ranging from:
Investment Advice “3(21) Fiduciary”
Outsourced Investment Management “3(38) Fiduciary”
UNDERSTANDING THE DIFFERENCE:
Who makes decisions?
Plan Sponsor
advised by Lockton Experts
Lockton
With a Team of Experts
What can our investment menu include?
Virtually any design
Pre-designed menu
Includes
Target date funds as QDIA
Stable Value
Index funds
Optional active core choices
What vehicles can we use?
Any Vehicle
Mutual funds, separate accounts, etc.
What recordkeepers can we use?
Any Recordkeeper
Decision criteria considers administration price impact
Who manages fund changes?
Plan sponsor
advised by Lockton
Professional expertise
Client specific criteria
Systematic decision- making
Documented rationale
Note: Plan sponsors retain the on-going duty of monitoring their 3(21) or 3(38) fiduciaries.

6. Institutional Process Leads to Objective Decision-making
Reviewing 40 rolling quarters reveals whether the managers consistently outperform:
Benchmarks
Peer Groups
Modern Portfolio Statistics (alpha, beta, R2) measure:
Recent Performance
Risk
Risk Adjusted Performance
Style
Consistency
Quantitative
QUALITATIVE
Relationship with 80+ firms enable local and national conversations with investment firms about:
Products
Performance
Personnel
Perspective on the market
Recommendations
Fund Options
Documented Rationale

7. Powerful Tools Analyze Options and Track Decisions
Results:
Over a 5-year period,
of LockSMART recommendations remain above median (vs. industry average of 23%1)
70%
Lockton-advised plans were audited nearly
times per year over the last 5 years2 30
findings
1 ”Industry average” defined as top quartile managers in 2010 who remained above median in 2015
2 Fiduciary Review process established in 2010