About Our Fiduciary Process

Cowden Advisers, Inc. knows that a defined contribution plan sponsor's biggest concern is providing competitive and comprehensive investment options for plan participants. The key to a valuable plan is an effective fiduciary process, a formalized course of action that outlines how the plan should be created, manage, documented and monitored. A great process can provide plan sponsors with peace of mind and excellent protection from fiduciary liability.

The first step in the Cowden Advisers, Inc. process is the formation of an investment committee. Every participant-directed defined contribution plan should be managed by a committee. And every investment committee must be governed by formal bylaws that identify the committee members, enumerate their responsibilities and dictate the process for meeting those responsibilities. This committee will define the details of the fiduciary process and commit the plan sponsor to this process.

One of the first steps for the investment committee, and the second (and possibly most important) part of the Cowden Advisers, Inc. process, is the creation of a meaningful Investment Policy Statement (IPS). The IPS should:

• Name the decision makers (usually the committee and an independent investment advisor);
• Explain the investment philosophy of the plan;
• Detail the specific types of investments that will be offered to participants;
• Stipulate the criteria used to evaluate mutual funds for selection and on-going monitoring; and
• Mandate a practice of monitoring and documentation.

The immediate value of a clear and thorough IPS is an effective method of selecting and monitoring the plan's funds. Remember – the strategy for selecting funds offered by a defined contribution plan is somewhat different than an investment strategy for a pool of money. The plan sponsor will not ultimately determine the allocation of the funds. As such, investment performance should not be the only criteria used to select funds. A good IPS will define a consistent style of funds, the level of risk, manager tenure and appropriate fees in addition to fund performance (typically over 3- or 5-year periods). The IPS will also set a regular schedule for monitoring the plan's sponsor, record keeper and fund performance. A schedule should also be set to periodically review the fiduciary process to ensure that it remains appropriate over time.

Throughout the whole process it is critical to document the work. In order for all of your diligence to be valuable, you must document your investment decisions regularly. If you follow your IPS, you will greatly reduce the chance of future problems. However, compliance with fiduciary standards will count for little if you have no way of demonstrating the steps and methods used to achieve compliance. Proper documentation and retention of documents will prove that fiduciaries acted prudently at all times.

Cowden Advisers, Inc. realizes that each plan is unique and one size does not fit all. But we also believe that our process is an effective framework within which a successful plan can be designed. Cowden Advisers will help you create, follow and document your own plan's process, providing you greater protection from liability, a competitive employee retirement plan and peace of mind.