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To learn more click the following links: INTRODUCTION
FIDUCIARY RESPONSIBILITY AND INVESTMENT POLICY
EDUCATION, COMMUNICATION, AND SUPPORT
INVESTMENT OPTIONS
FMS MANAGED RETIREMENT PORTFOLIOS
PLAN MANAGEMENT AND ADMINISTRATION SERVICES
PARTICPANT INFORMATION ACCESS
PLAN FEES
FINANCIAL PLANNING ASSISTANCE INTRODUCTION
A retirement plan can be a wonderful tool to recruit new employees and to retain and motivate current employees to work harder and remain loyal to an employer by helping provide them with additional income during their retirement years. FMS has developed a proprietary retirement plan platform to provide plan sponsors with a superior option to insurance company, brokerage house, and bank product plan offerings. We offer a program that includes complete integration of investment product and administrative functions in conjunction with two nationally known administrative firms: AMI Benefit Plan Administrators, Inc. (AMI), located in Cortland, Ohio, and Steele Retirement Plan Services, Inc. (Steele), located in Dubuque, Iowa. Our attention to plan detail, investment fund selection process, “Managed Retirement Portfolios” program, and on-going participant communication and education programs set us apart from other retirement plan vendors. Return to Top
FIDUCIARY RESPONSIBILITY AND INVESTMENT POLICY
A fiduciary of a retirement plan has the responsibility to be prudent in the operation and management of the plan. FMS works with plan fiduciaries in the administration and operation of the plan to help protect them from liability in the exercise of their duties. In addition, FMS assumes the role as the plan's "Fiduciary Investment Adviser" under the Pension Protection Act of 2006. Working with the Trustees of an employer sponsored qualified plan, we develop an “Investment Policy” for the plan. The purpose of this “Investment Policy” is to establish guidelines for the investment selection and management of the funds held in trust for the benefit of the participants in the plan. Why is this important? A plan Trustee has a fiduciary responsibility to manage the plan for the benefit of the participants and their beneficiaries. As a formal description of the plan’s investment policy, the investment policy statement sets a framework for plan investment decisions and helps protect the plan sponsor and other fiduciaries by presenting a detailed and sensible fiduciary process. Included in the investment policy are the criteria for the selection of investment options to be offered under the plan that will enable each participant to invest according to their personal risk tolerance, savings time horizon, and financial goals. In addition, the investment policy will establish guidelines for an on-going review of the available investment options. To help participants make informed decisions about their investment selections, we develop an on-going education program that includes employee meetings; booklets that contain information about the plan, saving for retirement, types of investments and asset allocation, and the available plan investment options; and provide website access to plan, general investment, and fund information. Through the implementation of this investment policy, the plan intends to satisfy the requirements of Section 404(c) of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, and the Department of Labor regulations thereunder, which limits the liability of Plan Fiduciaries for investment losses from accounts directed by the participants.
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EDUCATION, COMMUNICATION, AND SUPPORT
Employees need an effective, targeted education program and on-going plan communication to help them make informed retirement planning choices. Our personal involvement and commitment at a local level provides employees with a comprehensive education and communication program from the time of enrollment to retirement and beyond. Before we conduct enrollment meetings, we work to develop plan awareness through a multi-stage promotional campaign. Even for employees who don’t take the time to read these materials, they help to create an atmosphere that stimulates plan awareness and informal discussions as the time for enrollment approaches. Employees are provided with a completely customized enrollment package that includes an education package with information on topics such as saving for retirement, advantages of tax-deferred savings, and investment concepts; a “Plan Highlights” booklet that includes specific plan information such as eligibility, vesting, contribution limits, deferral percentages, and instructions on how to enroll in the plan; a “Retirement Needs and Income Planning” calculator to help participants better plan to meet their needs; an “Investor Profile” to guide participants in the selection of investments based upon their risk tolerance; an “Investment Options” booklet that provides information about each of the available investment options; and an “Enrollment Package.” At the enrollment meetings, we discuss topics such as how much money will be needed at retirement, the importance of saving for retirement; the tax benefits of a 401(k) plan; investment basics including types of investments, historical performance, risk tolerance, investment strategies, and types of investments available under the plan; importance of asset allocation and the opportunity to have their accounts professionally managed under the FMS Managed Retirement Portfolios program; and specific plan information such as eligibility, deferral limits, vesting, loans (if applicable), withdrawals and distributions; investment options, and accessing account information. The content of this meeting is customized based upon he needs of your employees and time considerations of the company. Your plan’s Investment Adviser Representative is also available to meet individually with employees who have specific questions or would like additional planning assistance. On an annual basis, we conduct Plan Update meetings where we provide information on any changes made to the plan, market commentary, discuss the performance of the investment options offered and announce any changes in the investment fund lineup, and answer any questions participants may have about the plan. Employees are often hesitant or embarrassed to ask questions during open meetings. For that reason, we also offer “Lunch and Learn” meetings where we can address the questions or concerns of participants in an informal setting regarding the plan or any other financial related topics. Employees are asked to submit questions or topics of interest to us through the company. We then set up a one hour informal meeting over lunch to discuss those topics and answer questions employees may have. These meetings are a great way to increase interest in the plan and provide a better understanding of this important benefit that you provide as well as help employees make better decisions in other areas of their financial life. Our communications efforts don’t end with employee meetings. The key to success in both increasing plan participation and satisfaction with the program is continued reinforcement from a variety of sources. All participants receive quarterly education newsletters with their statements. In addition, employees can access information on a variety of financial topics and the fund options available through our website.
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INVESTMENT OPTIONS
As a plan sponsor and in following the guidelines of the plan’s “Investment Policy,” there is a fiduciary responsibility to provide employees with a diverse menu of investment options. FMS takes that fund selection process a step beyond our competitors by providing an unbiased investment and fund monitoring process that enables us to select appropriate investment options without any proprietary investment option requirements. The fund selection and monitoring process that we use is the same as the process developed for our fee-based investment management clients and provides your plan participants with a wide array of investment options in all asset classes. As a result, participants have the ability to develop a diversified investment portfolio that will enable them to better manage risk, pursue potential returns that are consistent with their investment objectives and tolerance for risk, and better assist them to meeting their personal retirement planning goals. FMS utilizes a 4-step selection and ongoing monitoring process in determining which funds it recommends to be included in a Plan: 
Step 1: Preliminary Fund Screening
The available options are screened for performance with a focus on the trailing three (3) and five (5) year periods under the direction of a manager or management team that has been in place for a minimum of three (3) years. Step 2: Statistical Assessment
Once the preliminary fund screens are completed, we perform a statistical assessment of each investment option in four separate areas. Return Analysis – to gauge how well an investment option historically has performed compared to similarly managed investment options and market indices. Risk Analysis – to evaluate how much risk a manager has taken to achieve a fund’s investment return. Style Adherence – to determine how consistently the fund has been managed according to its stated investment objectives. Risk-Adjusted Return Measures – to determine the extent to which a fund has rewarded investors for the level of risk undertaken. Step 3: Analyze Additional/Qualitative Factors
In addition to the statistical measurements, we look at the fund management firm’s investment process, style, and philosophy. We also review other qualitative factors such as portfolio turnover, sector weightings, expense ratios, market capitalization, market ratios, and, for bond offerings, credit quality and duration. Step 4: Final Review and Selection
We choose our menu of investment options based upon an evaluation of all the available information. Our goal is to offer plan participants the best available investment choices across the broad spectrum of asset classes. It is important to note that each investment firm has a distinct style and economic viewpoint guiding their fund managers. Our process ensures that fund offerings are diversified among different investment management firms so that fund choices don’t reflect a single investment perspective. We continually monitor all available investment options based upon the criteria outlined above. Changes are recommended as appropriate to make certain that plans continue to offer the best available investment options in each asset class. Return to Top
FMS MANAGED RETIREMENT PORTFOLIOS
Even with the best educational materials and informative enrollment meetings, the question that most employees then want answered is, “How should I invest my money?” Many employees end up putting their money into one or more funds that have the best investment return for some period of time. Others, worried about making a bad investment decision particularly in a volatile market, simply invest in the guaranteed interest or money market account options. Neither of these approaches is a prudent way to invest what is often the largest investment a plan participant will ever own. For such participants, we offer another alternative … FMS Managed Retirement Portfolios. In managing assets, FMS utilizes the concept of “Asset Allocation,” which is investing in different asset classes such as stocks, bonds, and cash to minimize the risk in an investment portfolio. The concept is based upon the principle of diversification, which is the process of combining different asset classes that react differently in the market from one another in order to maximize long term investment performance while reducing the risk (volatility) of a portfolio. How important is asset allocation? According to Ibbotson Associates, a leading authority on investment analysis, “the asset allocation decision is by far the most important determinant of performance for the long-term investor.” (Source: “The True Impact of Asset Allocation on Returns”, Ibbotson) FMS uses specialized asset allocation planning software to determine how money should be allocated among the various asset classes within a portfolio. From that analysis, we have developed five portfolios that are offered as investment options in each Plan. These portfolios are managed to maximize return for a given level of risk. These portfolios are:
- Aggressive Growth … designed to maximize return for an investor who is willing to accept the risk of significant fluctuations in market value
- Capital Accumulation … designed to achieve above average long-term growth while reducing market volatility
- Balanced … designed to provide growth through stock investment with investments in bonds to further reduce the volatility of a portfolio
- Income and Growth … designed with significant bond investments while seeking some principal growth through stock investments to offset the impact of inflation over the years
- Capital Preservation … designed with an emphasis on the preservation of capital with little concern for growth, even at the risk of reducing the real value of the portfolio over years due to inflation
The goal in the management of each of these portfolios is to achieve investment returns greater than the market performance for investments with a similar level of risk. We measure our performance by using a customized benchmark of industry indices that is weighted as closely as possible to the asset classes held in each portfolio. Funds are selected from the investment options available under your plan and are combined to create each managed portfolio. The holdings of the funds comprising each portfolio reflect as closely as possible the optimal combination of asset classes as determined by our asset allocation modeling program. These holdings are reviewed on a regular basis to make certain that each portfolio continues to match its target asset allocation. FMS continually monitors the funds that are offered to plan participants. Fund changes in a portfolio are made as appropriate to make certain that each portfolio continues to be comprised of the best available investment options in each asset class. In accordance with the Plan’s “Investment Policy,” plan Trustees are advised regarding any proposed. Market conditions and changes in specific fund holdings may cause a portfolio’s investment in various asset classes to vary from the target allocation. The portfolio is rebalanced when the actual weightings differ from the target weightings by an amount as to materially change the investment risk of the portfolio. In addition, participant accounts are automatically rebalanced yearly to their original asset allocation. Periodically, the long term return expectations and risk for an asset class may change. Our managed portfolios will be changed to reflect these new expectations but without changing the risk characteristics of the managed portfolio. A word of caution. Through proper asset allocation and appropriate management, you can make estimates of both future long-term performance and the investment risk of a portfolio to maximize your return for each level of risk. It does not, however, guarantee the investment results of any portfolio. The fee for management of the FMS Managed Retirement Portfolios is included in the annual investment advisory fee charged to the Plan.
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PLAN MANAGEMENT AND ADMINISTRATION SERVICES
Management and administrative services for FMS Managed Retirement Plans are provided by either AMI Benefit Plan Administrators, Inc. (AMI), located in Cortland, Ohio, or Steele Retirement Plan Services, Inc. (Steele), located in Dubuque, Iowa. Both firms specialize in total plan management and provides complete service including plan conversion, document preparation, employer and participant services, recordkeeping, and all on-going and annual administrative service functions. With both TPA firms, you will enjoy the benefits of having a nationally known administrative partner and on a local level that is committed to outstanding service to both employers and participants. For more information about our TPA partners, for AMI go to www.amibenefit.com, and for Steele, go to www.steelrps.com.
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PARTICIPANT INFORMATION ACCESS
Participants need to have access to up-to-date and accurate information to manage their retirement account and make informed decisions about retirement planning. Both TPA firms have secure websites available for participants to access:
- Account balance information by fund and source
- Transfer existing savings by percent or dollar amount
- Change investment election of new deposits
- Loan modeling
- Unit share prices as of the close of the previous day
- Review, change, or stop the current deferral percentage
Participants can also access plan information through a link available on the FMS website. Specific investment inquiries should be directed to the plan’s Investment Adviser Representative. Return to Top
PLAN FEES
Unlike many plan providers, we disclose all fees and expenses related to the plan. The costs for the services provided to the Plan and its participantsare separated into two categories. The first is for administration and compliance services and includes plan administration and related government reporting; plan conversion and document preparation, asset recordkeeping, trading fees, participant reporting, and internet and telephone access to information. This fee is based upon the type and scope of work to be provided. The other cost is for investment advisory services provided by FMS. Included in these services are:
- Establishment of an “Investment Policy” for the plan and annual meetings with the Trustees to review the plan and investment options
- Selection and on-going monitoring of the investment fund options offered to plan participants
- Management of the FMS Managed Retirement Portfolios that are offered as an investment options under the plan
- Coordination of the enrollment process both at the initial plan installation and at plan entry dates
- Employee education and communication programs to maintain the plan’s compliance with IRC Section 404(c)
- Availability to answer investment related questions from employees
- Coordination of all administrative related functions with AMI
Investment management fees vary based upon the assets under management and are charged quarterly based upon the assets under managment at the end of the quarter. Plan administration costs are generally charged directly to the employer plan sponsor. Other costs are generally charged at the participant level as an adjustment to earnings in each such account. We can, however, provide plan sponsors with a great deal of flexibility as to how these expenses are to be paid. For more information about fees for a specific plan, please contact us for a complete plan proposal. Return to Top
FINANCIAL PLANNING ASSISTANCE
To help employees coordinate their retirement plan with their other assets and estate plan, FMS offers participants comprehensive financial planningassistance. This planning process includes a review of an individual's current financial situation, a discussion of financial goals, and the establishment of planning objectives. A detailed written plan is then prepared that includes recommendations in such areas as income tax planning, property and liability insurance, disability and long-term care issues, life insurance, and estate planning. Plans are reviewed and updated annually. These planning services are offered on a discounted fee-basis to plan participants. As an employer, you can also consider offering financial planning assistance as part of the benefit package for some or all of your employees. Fees paid are tax-deductible and not included in the employee's taxable income. Return to Top
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