For Plan Sponsors

Since 1989, Scarborough Capital Management has been working with plan sponsors to address their 401(k) advice, management, and education needs. Over the years rules governing the industry have been revised or created to help plan sponsors understand their opportunities and limitations with regard to 401(k) advice and management. But with the increase in regulation came greater confusion on the part of human resource executives and benefit administrators as to what they can and cannot do for their participants.

Scarborough Capital Management hopes to explain some of those rules and help plan sponsors better understand what they can do for their participants. We invite you to peruse this section of the site and contact us if you have further questions.

As always, you can contact us today at 800-835-401K!

What is 401(k) Management?
Helping your employees accomplish their retirement dream!

With the creation of the 401(k) plan came the creation of 401(k) advice. Different providers began offering advisory services in a multitude of formats, whether it was internet-based or through a call center. Both have their advantages – inexpensive and convenient – but also have their drawbacks – impersonal and lack of follow-through. But in 1990, Scarborough Capital Management created Savings Plan ManagementTM – a service that takes advice to another level.

Savings Plan ManagementTM, also known as managed accounts, is a system where participants can get advice on the retirement plan, but then receive the active management of the account from a trained, experienced financial professional.

What we have found to be true over the years is that the average participant is a novice investor at best. Scarborough Capital Management has the knowledge and time to make prudent moves within their 401(k) plan and rebalance accordingly when the time is right. We have also found that many people who receive advice on their plan fail to follow-through with the recommendations they are provided. This is the advantage of Savings Plan ManagementTM. We make the necessary moves and adjustments for the participant!

Here is how Savings Plan Management TM works:

  1. The participant completes our extensive Investor Profile questionnaire.
  2. The participant discusses the Investor Profile with his/her designated Retirement Advisor who develops a sound understanding of the participant’s financial goals.
  3. The Retirement Advisor assigns a saving plan portfolio designed to meet the participant’s financial goals while attempting to minimize the level of risk.
  4. The Retirement Advisor then implements the recommendation and reallocates the portfolio on the participant’s behalf.
  5. This Retirement Advisor then continues to work with the participant throughout the duration of the contract.
  6. There is no limit to the amount of time you may spend consulting with your Retirement Advisor.

Over the years, Savings Plan Management TM has become the model program that other industry professionals have followed. Clearly, Scarborough Capital Management has established itself as a leader in the 401(k) industry.

To learn how Savings Plan ManagementTM can benefit your participants, please call us today at 800-835-401K!

Back to top

Investment Selection
Put Scarborough Capital Management’s 20 years of experience working with plan participants to work for you. As a fiduciary to the 401(k) plan, you have an obligation to carry out your duties “...solely in the interest of plan participants and their beneficiaries.”

The investment selection process for Defined Contribution Plan Sponsors is an important fiduciary responsibility. Unfortunately, it is also a time consuming one that requires a high level of knowledge and sophisticated analysis. This is where Scarborough Capital Management can help you – the plan sponsor!

Our Investment Review and Selection process helps you work through the prudent processes, paying careful attention to:

  • Asset Allocation
  • Investment performance
  • Investment risk
  • Style consistency
  • Fees

After our review, we will provide you with a detailed, objective analysis of these critical areas that can help ensure you are offering your participants a retirement benefit that is just that - a benefit.

To begin selecting your plan investment options, call us today at 800-835-401K!

Back to top

Plan Selection
Scarborough Capital Management has seen it all when it comes to 401(k) plans. Because we have worked with participants in plans across the country, we have a clear understanding of what makes a 401(k) plan superior and dire.

To help you with this enormous undertaking, we have developed a Plan Selection service where we will comb through your plan choices and work with you to select the plan that is right for you and your participants. Without the guidance of a knowledgeable professional, you may struggle to make the best decision. We will help you sift through your choices by looking objectively at:

  • Investments
  • Record Keeping
  • Design
  • Technology
  • Compliance
  • Employee Communications
  • Cost

To begin selecting the best possible 401(k) plan for you and your participants, call us today at 800-835-401K!

Back to top

Fiduciary Liability
One of the biggest questions plan sponsors are always asking is, “What can I do – and not do – for our participants?” To best understand the opportunities and restrictions of the plan sponsor, you need to understand the guidelines set forth by the Employee Retirement Income Security Act (ERISA).

What is Fiduciary Liability?
ERISA protects your plan's assets by requiring that those persons or entities who exercise discretionary control or authority over plan management or plan assets, anyone with discretionary authority or responsibility for the administration of a plan, or anyone who provides investment advice to a plan for compensation or has any authority or responsibility to do so are subject to fiduciary responsibilities. Plan fiduciaries include, for example, plan trustees, plan administrators, and members of a plan's investment committee.

The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan's investments in order to minimize the risk of large losses. In addition, they must follow the terms of plan documents to the extent that the plan terms are consistent with ERISA. They also must avoid conflicts of interest. In other words, they may not engage in transactions on behalf of the plan that benefit parties related to the plan, such as other fiduciaries, services providers or the plan sponsor.

Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA including their removal.

-United States Department of Labor (DOL)

Back to top

The PPA and Fiduciary Advisers

August 17, 2006 was a historic day for 401(k) participants across the country. It was the day when the U.S. government realized that Americans need assistance in maximizing the potential of their company-sponsored retirement plans. It was the day the President Bush signed into law the Pension Protection Act of 2006 (PPA).

As a plan sponsor, you are delicately balancing two commitments. The first commitment is to your company and your job of protecting it from any backlash or criticism regarding your role as a fiduciary to the plan. The second commitment is to your employees – your participants. With the passing of the PPA, your role of addressing these commitments just got a bit easier.

The PPA has provided an exemption to ERISA’s prohibited transaction rules for advice provided by a “fiduciary adviser” under an “eligible investment advice arrangement.” Advice providers must provide the advice in a way that can be understood by average investors and must be delivered in one of two ways:

  • First, the fees paid to the adviser cannot fluctuate depending on investment options chosen.
  • Second, a computer model under an investment advice program modeled after the DOL’s Advisory Opinion 2001-09A. This is the same Advisory Opinion in which Scarborough Capital Management served as the model program.

Since 1989, Scarborough Capital Management has taken on the responsibilities of a fiduciary to the thousands of 401(k) participants. Now the PPA is going to require everyone to do the same. The PPA is requiring all providers of advice services to plan participants to acknowledge, in writing, that it is a fiduciary of the plan with respect to advice. This means that although plan sponsors must prudently select fiduciary advisers to the plan, the plan sponsors will not have the responsibility to monitor the advice being given.

The PPA has made it easier for plan sponsors to balance their two commitments. As fiduciary advisers, Scarborough Capital Management can help you provide participants with professional advice services while reducing your company’s exposure. Give us a call today at 800-835-401K.

Back to top