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Beyond Open Architecture

Beyond Open Architecture. Webcast December 8 th , Noon CST. Speakers. Kevin Harley CEBS, Vice President, National Sales Manager. Sheree R. Yoder Vice President and Portfolio Manager. Michael J. Shlensky Vice President, Conversion Manager. Stephanie L. Napier

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Beyond Open Architecture

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  1. Beyond Open Architecture Webcast December 8th, Noon CST

  2. Speakers Kevin Harley CEBS, Vice President, National Sales Manager Sheree R. Yoder Vice President and Portfolio Manager Michael J. Shlensky Vice President, Conversion Manager Stephanie L. Napier Vice President, Employee Benefit Counsel

  3. PLANSPONSOR Industry Overview • Inflexion point for DC: Increasing use of auto-everything; opt out, as opposed to opt in • Whither the sophisticated participant?

  4. Is Open Architecture now a requirement? • Yes, but proprietary DC models still do well • Most providers say they are open architecture • It is not what you say but what you do in practice

  5. Proprietary funds are pushed because of economics • How are your economics different? • Client philosophy first • State of the art technology platform

  6. Is Open Architecture more expensive? • Costs vs. Net Return • Fee Transparency

  7. Open Architecture in Practice • Core line-up • Life style (Risk Based) • Life cycle (Age Based) • Individually Directed Accounts

  8. What is the difference between an IDA & SDBA? • Both offer more flexibility than a core line-up • Any asset allowed by ERISA • Registered Mutual Funds • Publicly traded securities • Non-publicly traded securities • Hedge funds • Real Estate • Limited Partnerships • Freedom to select an advisor to manage their portfolio

  9. How do you work with the Plan Sponsor in setting parameters? • Determine limits and guidelines for investments • Securities law restrictions • More plan sponsor involvement up front • M&I reviews non-publicly traded investment materials

  10. How do the trades flow in an IDA? • We can trade Delivery vs. Payment with any broker selected • M&I maintains custody of assets • Flexibility is the key

  11. Is the IDA an evolved SDBA? • Our belief: need to accommodate non- publicly traded securities and an advisor selected by a participant • Increased automation • Trust Company capabilities

  12. Is the IDA an expensive feature for Plan Sponsors? • Participant demographics • IDA = Retail brokerage • Who is paying for what

  13. What are the advantages for the Advisor? • Trade individual security issues through their own brokerage arm, which provides direct compensation • Establish asset allocation across all investment classes and maintain a single investment approach for all of a participant’s assets

  14. What role can the Advisors play in the IDA? • Professional money management • IDA becomes an extension of existing accumulation program • Mirror private savings of each participant • Maintain personal relationships

  15. What is getting in the way of broader adoption of IDAs? • Plan Sponsor attitudes • It is the participant’s money • Satisfying the vocal minority

  16. Who would be interested in this product? • Professional service groups • Large corporations with a significant number of highly compensated executives • Technology and Financial Service firms

  17. Thank You… • For more information, contact: Kevin Harley National Sales Manager M&I Trust Company 866/418-9339 retirementservices@micorp.com

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