ASPPA Recordkeeper Certification: Your Seal of Excellence Western Benefits Conference July, 2008 Seattle, Washington

1. ASPPA Recordkeeper Certification: Your Seal of Excellence Western Benefits Conference July, 2008Seattle, Washington

2. How Did Certification Emerge? • ASPPA…the industry’s most trusted source for: • Professional credentials • Legislative tracking • Regulatory representation • Leadership for independent recordkeepers • ASPPA…commissioned an industry task force • Launched – April 2007 • Initial certifications – September 2007

3. The Goals of Certification Ronald E. Hagan CEO and Chairman Roland|Criss

4. The New Regulation that will Shakeup the Recordkeeping Business:DOL 408(b)(2) • The business implications of Regulation 408(b)(2) • How the ASPPA certification can get your firm ready • Proving readiness to a nervous market

5. The ASPPA Task Force Its Makeup: • Members: • Senior operations executives from the recordkeeping industry • Senior staff from ASPPA • Advisors to the Task Force • CEFEX – Certification programs • Fi360 – Standards development • Roland|Criss – Audit methodology

6. The ASPPA Task Force Its Mission: • Develop uniform best practices • Create a “Standard” for self-regulation… • Design it to support Investment Stewards • Tailor it to fit each of the industry’sthree business model categories

7. Three Business Models ASPPA’s Service Class I Bookkeeping for trading is bundled along with proprietary products and services. • Investment products • Asset custody • Transfer agency • Trust • Administration • Participant enrollment • Investment advice for participants

8. Three Business Models ASPPA’s Service Class II Bookkeeping for trading transactions is nearly the sole focus, but alliances with investment firms, third-party administrators, asset custody, and trust providers round out a full offering of services.

9. Three Business Models ASPPA’s Service Class III This is an Administration only business model. (No bookkeeping for trading transactions, investment products, asset custody, or trust services.)

10. The ASPPA Task Force Its Mission: • Develop uniform best practices • Create a “Standard” for self-regulation… • Design it to support Investment Stewards • Tailor it to fit each business model type • Ensure independence and confidentiality… • The audit • Registration committee’s evaluation

11. What do fiduciary organizations need? Develop and maintain processes and controls Document the execution of processes Continuously evaluate the effect of processes Overview of the ASPPA Standard The Four Building Blocks

12. The Standard:A “Quality Management System” • ISO-like for self-regulation • 17 practices emerged from the building blocks • Developed from industry best practices and the needs of fiduciary organizations • Ensures fiduciary support competency • Covers operations, information technology, organizational behavior, and fiduciary processes • Makes use of SAS-70 audits when available

13. Committee reviewsCAP report, OFIs, NCRs • Decides pass or fail • If pass - issues certificate 3 • Pre-assessment • Onsite assessment • Prepare Consultant’s Assessment of Practices (CAP) report • Annual renewal 2 • Signs RAA form • Completes Assessment Questionnaire 1 3 Steps to Certification

14. The Assessment Process 1.OFF-SITE DATA COLLECTION CEFEX analyst gathers and formats information 2.ON-SITE ASSESSMENT Verify data and interview key personnel • 3.THE “CAP REPORT” • Findings • Opportunities for Improvement • Non Conformities • Recommendation ISO 19011 4.INDEPENDENT REVIEW CEFEX Registration Committee makes certification decision 5.CERTIFICATE ISSUED Certificate issued to client…public viewing at www.cefex.org

15. Benefits of Certification 1. Pre-empts Federal Licensing for Recordkeepers Self-regulation uses a defined industry standard 2. Public Confirmation Instills trust throughout the industry 3. Commitment to Stakeholders Ongoing rigorous audits ensure adherence to standards and continuous improvement

16. Benefits of Certification 4. Market Recognition The mark conveysan identity of excellence 5. Effective Risk Management Reduces the potential of future liability claims 6. Competitiveness Meets plan sponsors’ demand for certified providers

17. The Demand for Proof of Excellence • Plan sponsors require ASPPA certified recordkeepers • “Fiduciary Identity” isre-shaping business models • Recordkeepers under regulatory pressure to be certified • DOL Regulation 408(b)(2)

18. Best Practices:The Pursuit of Excellence Chris Stroud, MSPA, MAAA, EA President

19. The Pursuit of Excellence

20. The Importance of Best Practices “This is the first time in the history of business that you can be great at what you’re doing today and be out of business tomorrow.” - Ken Blanchard & Terry Waghorn

21. Best Practices: Organize

22. Best Practices: Organize

23. Best Practices: Formalize

24. Best Practices: Implement

25. Best Practices: Monitor

26. ASPPA RK Certification vs SAS70 ASPPA SAS70 _______________________________________ ______ Qualifies industry self-regulated status YES NO_ Defined standard based on regulatoryYES NO pressure points______________________________ Audit methodology equally applied to all YES NO business models_____________________________ Audit focuses on overall organizational YES NO ___processes__________________________________ Audit considers other assessments/audits YES NO_ Central committee decides pass/fail on a YES NO uniform approach_____________________________ Evaluates company’s capability to support YES NO a fiduciary organization’s legal duty_________________

27. The Rate of Change “We double the change rate every decade… we’ll make twenty years of progress by 2014 and do the same again in only seven years. We will witness 1,000 times the rate of progress in the 21st century as compared to the 20th century.” - Ray Kurzweil, author, futurist

28. The Growth of Information Technologies “The exponential growth of information technologies is even greater: We’re doubling their power about every year… As an example, it took us 14 years to sequence HIV; we recently sequenced SARS in only 31 days.” - Ray Kurzweil, www.singularity.com

29. Opportunities

30. What Remains Constant? The Human Connection

31. Bridging the Employee Generation Gap

32. The Model Employee of the Future

33. Lack of long-term vision • Failure to communicate direction/plan • and establish clear goals and objectives • Inattentive to customer needs • Underestimate the competition • Inadequate financial planning • Inability to change! Why Businesses Fail…

34. Strategic Business Planning "In most companies, people at the top know where they are going – but the employees struggling to get the work done are often in the dark about the company direction. If you don't tell them where you want to go, you probably won't get there. A written business plan allows you to do that." - Ken Ingham, MSPA, MAAA, EA, AIFA ® Ingham Retirement Group

35. Strategic Direction

36. A Written Business Plan: A Living, Breathing Document

37. Three Levels of Succession Planning

38. Benefits of a Written Business Plan

39. Action Plan… www.asppa.org www.cefex.org www.rolandcriss.com www.scs-consultants.com

40. Questions and Answers Ron Hagan Chris Stroud Roland|Criss

41. ASPPA Recordkeeper Certification: Your Seal of Excellence Western Benefits Conference July, 2008Seattle, Washington