Investments
Investment Structures
Introduction
We support plans with Co-Mingled investments; Self-Directed Investments; and combinations of Co-Mingled and Self-Directed Investments.
Self Directed Investments
A plan that offers self-direction of investments is one that delegates the investment decision making process to participants. To some extent, plan fiduciaries can reduce their liability exposure by taking advantage of rules under ERISA Section 404(c). There are several different ways by which a plan can offer self direction. We support all of the following:
- Individual Brokerage Accounts – Under an individual brokerage account approach; also known as an “fbo” approach, each participant’s contributions are invested in a separate brokerage account. The participant controls all investment decisions. This approach has both pros and cons. One advantage is that participants can obtain a near-unlimited variety of investments.
- Daily Valuation Platforms – “Daily Valuation” is a term generally applied to investment programs in which participants are offered a menu of investment funds from which they can pick and choose. Participants generally receive quarterly statements, glossy enrollment materials and excellent online access to their accounts. Accounts are re-valued at the close of business on every trading day; hence the name – Daily Valuation.
The backbone of any Daily Valuation program is a computer system that can track the individual investment decisions of each participant. This computer system is referred to as a ‘platform’. Almost all financial institutions, and many consulting companies, offer Daily Valuation platforms. The critical questions are – what funds do they make available; what services do they provide; and how much do they cost.
The Law Offices of R. David Danziger, P.C. works with most of the best know Daily Valuation platforms, and we will consider working any other platform that is willing to work with us.