Comparing Fees and Services – Daily Valuation DC Plans

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

2. 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

3. 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”

4. 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

5. What Americans Worry About Most Age Group 18-2930-49 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)

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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 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% 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% 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)

12. 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?

13. 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?

14. Questions?

15. Contact Joe Boyle BPAS Sales Consultant jboyle@bpas.com