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  1. This is a response to all questions/comments since my Feb 19, 2017 post. My comments are limited so I can focus on: 1) Ensuring current participants are getting the best possible service; 2) Responding to districts/charters that want information about the Trust; and 3) Handling all other issues. ScottyD. Your assumptions re: CBIZ/VALIC/Retirement Trust fees are high. You cite year-end numbers which are not the numbers throughout the year and, even if they were, the amounts cited are at least 16% higher than actual. Some participants close accounts before a quarter ends so the Trust doesn’t receive its $5 quarterly fee. Not all assets are subject to the basis point fee (bps), including annuity assets a district rolls into the Trust and assets in VALIC’s fixed income fund (VALIC’s only fund in the Trust). On 1/1/18, CBIZ reduced its fee to 7.5bps and VALIC to 21bps. The Trust increased its fee by 3.25bps (no impact on total participant fee) to cover legal, insurance, marketing, meeting and administrative support expenses, etc. Re: VALIC financial advisor compensation. The Trust’s agreement is their FAs receive the same compensation regardless of a mutual fund’s investment management fee. It’s been that way since the Trust began in Jan 2010 because we want the FAs to advise participants based on their goals and risk/reward tolerance to help improve their retirement outcomes. When FAs meet with Trust participants it’s for their 403(b)/457(b), not on ancillary products. Participants may ask about other products/programs; it’s up to the participant. VALIC FAs will help participants in determining whether to roll over assets from another program based on rollover fees, sometimes the fee is such that the participant can’t recover it going forward, even with the lower Trust fees. Re: assets that participants roll out of their Trust account. VALIC is preparing a report analyzing where assets go to buy time in Missouri’s educator pension system as well as to financial firms including VALIC. I will post a response when I have the report. Anecdotally, if the phone calls and emails I receive are an indicator, much more is going to firms other than VALIC. We’ll see. Re: concerns that VALIC FAs must be selling Trust participants other financial products, otherwise they couldn’t make a living. VALIC FAs have many other sources of income, be it relationships with employees in districts not in the Trust or clients in other entities, e.g. hospitals, local government, Higher Ed, etc. No, they don’t dependent on the Trust for anything close to 100% of their compensation, and that’s OK. The Trust, including its partners CBIZ and VALIC, focus on: · Each participant knowing the fees they will pay when they come into the Trust and seeing their admin fees on each quarterly account statement. · Transparency, that what you see is what you get in investment management fees, i.e. there are no hidden fees, e.g. revenue sharing, 12b1, etc. · Quarterly meetings between the investment committee and CBIZ, reviewing each fund’s performance. In eight years the Trust has replaced just two funds because they weren’t performing consistent with their category. · That from 1/1/10 through 12/31/17, 100% of the Trust’s funds have outperformed their category benchmark and 94% of those funds reduced their investment management fees. That illustrates the Trust was correct to use an open architecture approach and select funds based on long-term performance and cost, and that consortium buying works. · As a single provider consortium, focusing on education not sales, thus benefiting participants. · Continuously improving services and offerings by making managed accounts available for those who want them (and very few do) and a Qualified Longevity Annuity Contract (QLAC) for retirees who want more guaranteed income. We are now looking at a financial wellness program. As of 12/31/17, 21% of the Trust’s assets were in fixed income and 19.8% were in TDFs. Re: participation rates. Participation increases when a district joins the Trust but there are two other factors that impact participation. First, Missouri has one of the best defined benefit plans in the country so employees feel secure enough, but we keep educating to help those who need additional retirement income. Second, because of time constraints the Trust is always trying to increase awareness through school building staff meetings. Re: a self-directed option. The Trust has discussed this as an option. Our question is how to ensure a participant utilizing a self-directed account is best qualified to do so. Still, being debated. Finally, how do you argue with the current program that focuses on the participant, only costs a participant with a $10,000 account balance $52/year in admin expenses and provides the education, best in class investment options with low investment fees, due diligence, oversight, transparency, online tools, etc. that the Trust has?
  2. See earlier response re: due diligence process the Board went through before making the program available to all districts. As i stated before, most of the the MA participants are ones we inherited when their school district joined. Yes, if a participant goes into an MA the FA makes more but, based on the pricing of our MA program, it's far less than in a traditional programs. When a participant is unsure of how to invest their funds, the FAs first advice is to use a TDF which, based on total plan assets invested, is second to the fixed income option in the Trust. There is no reason for a VALIC FA to roll over a participant into an IRA when they retire because they can leave their money in the Trust. Because of the DOL fiduciary draft rules VALIC is making all their FAs fiduciaries therefore, as a fiduciary, the FA would have to let the participant know what the fee structure for an IRA would be vs. that of the Trust. Every time I've been contacted re: rolling over funds, it's been from an FA with another firm asking me about the process or thinking I can sign the form. I can only talk about VALIC in terms of the Trust's experience and it has been extremely positive. In part, it's because my VALIC POC is the same person with whom we started, and he and I agree that this is a participant-centered program. And, that is reflected in how FA compensation works. He, along with the responsible VALIC regional VP, is the reason VALIC is promoting the Trust in IL/MI/WI and maybe NJ. He also tries to get school districts in states he works in into the Trust. We talk at least weekly. We're on the same page as is the case with our RIA who has also been the same person from the Trust's beginning. ALL of US are of the same mind. I know the VALIC DMs in St. Louis and Kansas City very well and have met with VALIC personnel in the states noted above and with the corporate personnel as well. I'll probably be in Houston sometime this year to meet with personnel there to talk about how we create an infrastructure that will allow the Trust to go into additional states. At least once a year I meet with the FAs in St. Louis and KC to exchange experiences and gauge how they're approaching participants. Not sure I'll be able to do that as we move into other states but we'll see. Part of my focus on behalf of our participants is to be face to face both with the people leading the FAs and the FAs themselves to ensure the participant is first and I unequivocally believe they are. I believe VALIC sees the Trust's model as the future and they want to be in the lead. Bottom line, I trust the people.
  3. Update to my comments re: use of Managed Accounts within the CSD Retirement Trust. Current metrics, as of two days ago, is that the Trust has $5M of its $124M are in managed accounts and about 500 participants, of about 5400, are in a Managed Account. Again, not a large percentage.
  4. krow36 and 403bannuitysalesman. Thank you for your comments and questions. Re: Managed Accounts. First, very, very few of our participants utilize managed accounts (MA). After the fixed income option, the next most utilized investment (plan asset wise) is target date funds and we think that's good.The Trust initially added MAs when a district joining the Trust wanted it, as a condition of joining, because a number of their employees already had MAs so we grandfathered them in. Subsequently, after reviewing the due diligence process/checklist that VALIC FAs must go through with participants, the Trust decided to make it available to all districts. VALIC reports on quarterly basis the #s so next Wed at our Board meeting, they'll update that. The fee thru VALIC for the MA is 45bps/annum, otherwise it would be 60bps/annum, and yes FAs make more if a participant is in a MA. Ibbotson must use the Trust investment options only. The Trust's relationship with VALIC is different than what you may have experienced. First, if an FA is not working out at a district, I make a call and a new FA is assigned. I've only had to do that once. Second, FAs are compensated based on the amount of assets under management, not based on the mutual funds participants are in. We did that when the Trust started because we did not want FAs advice to be based on the investment management fee. Also, none of our mutual funds have revenue sharing so the investment management fee shown is all there is. The investment management fees range from 4bps to 94bps with a weighted average of 13bps (based on what participants are actually invested in) which is the expense ratio. E.g. if a participant had $10,000 invested in fund that had a 33bps investment management fee, their total investment fee would be $33 annually. Their admin fee would $51.75 (31.75bps and $20 headcount fee). We don't have annuities for asset accumulation purposes but do offer a Qualified Longevity Annuity Contract (QLAC) so that if a retiree wants to convert assets into guaranteed monthly income, they can. It also allows a person to put off the Required Minimum Distribution issue until age 85 vs. 70.5. Hopefully, I've answered your questions. Thank you.
  5. Hello, I’m the Managing Director of the CSD Retirement Trust (CSD-RT). I became aware of this forum recently and wanted to provide some background. Go to https://www.edplus.org/Page/592 for current information on investment options and expenses. The webpage has a Top Ten list, entitled: What is the CSD Retirement Trust? and CSD Retirement Trust PowerPoint. The CSD Retirement Trust (Trust) launched in Jan 2010 after an 18-month process involving K-12 teachers, business officials and other administrators. It started because school districts asked CSD to help them with the new IRS requirements (January 2009) re: sponsoring 403(b) programs. That’s why we say “the Trust was created by educators for educators.” Although the Trust started because school districts needed help with compliance and cost issues, we realized early on how it could help participants have a better retirement. The Trust, as plan sponsor, conducted a competitive request for proposal process before initially selecting CBIZ as its Registered Investment Adviser (RIA) and VALIC to provide administration, compliance, participant education, financial advisors and record-keeping in 2009 as partners. The Trust repeated a similar process twice since to ensure appropriate service and low cost. The Trust has always been a single-provider consortium, although it looked at a multi-provider approach initially. It focuses on participant education, not on selling products (the likely outcome when there are multiple providers). What sets the Trust apart from traditional provider environments is: • Our members govern the Trust. Each one has a representative on the Board of Advisers (BOA). The BOA elects three Trustees to act on behalf of the Trust and selects the Investment Committee which reviews investment option performance with our RIA each quarter; • It is participant-centric. Our goal is improve retirement outcomes for our participants through education, “best in class” investment options, low admin and investment management fees, transparency and by incorporating the most appropriate industry trends; o In addition to one on one and small group education, the Trust provides a quarterly workshop on how to optimize purchased service credits in the state retirement system using rollover 403(b)/457(b) assets (no rollover fee) as well as optimizing Social Security. We also offer a workshop on “catch-up” provisions three years prior to retirement; o Since the Trust began 94% of our investment options have outperformed their category benchmark and 94% have decreased investment management fees because we have leveraged our buying power. Investment management fees range from 4-94 bps. Based on actual investments, the weighted average investment fee for the Trust is 13 bps; o We have decreased admin fees 59% since the Trust began. Annually, we charge 32 bps of participant plan assets and a $20 headcount fee. School districts pay nothing. Quarterly participant account statements show all admin fees as do our presentations; and o The Trust provides a 403(b) and 457(b) (same investment), both traditional and Roth plus the option of a Managed Account and for retirees who want to convert their mutual fund assets into guaranteed monthly income, a Qualified Longevity Annuity Contract (QLAC). The Trust has 43 members, over 5,300 participants and more than $129M in assets. We’re shooting for 50 members and $150M in assets by year end. In addition to Missouri, we are working in Wisconsin (currently one member and one coming on board later this year), Illinois and Michigan. Other states have also contacted us. I’d be happy to provide my email and cell for those who would like to learn more.