Products September 22, 2016

External IT Launches Cybersecurity Program for RIAs

The most overlooked source of data breaches is employee-related negligence, according to an IT firm which just launched an educational program for financial advisers.  

Reported by

External IT has launched its Security Awareness Training (SAT) program, which is designed to educate financial advisers and their employees about best practices for using corporate information technology (IT) systems.

The program contains phish testing, reporting, and online training. After completion, External IT also re-tests and measures the effectiveness of the program and delivers the results to the compliance manager of the firm.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

“We’ve come to a point in the financial services space where cybersecurity is not only paid attention to, but has become a differentiator among firms,” says Justin Kapahi, technical director of External IT. “But for all of the attention cybersecurity is getting, there’s one important point that is being missed—the majority of security threats are actually originating from inside the walls of these firms. Information is shared through non-secured programs, passwords are being carelessly generated—the list goes on. We’ve developed SAT to provide advisers with clear security guidelines to ensure their information is protected from the inside-out, at every level.”

External IT also has launched the Policy and Procedure Development and Lifecycle Management offering to educate firms about the latest Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority(FINRA) mandates. This program also includes a quarterly cybersecurity update and a customized yearly cybersecurity report.

External IT specializes in offering cloud computing solutions to financial services clients including RIAs and broker dealers. For more information, visit the firm’s website here. 

Products September 22, 2016

White Paper Offers Fiduciaries Direction on Handling TDFs

In light of the DOL’s Conflict of Interest Rule, the department is taking steps to assure that plan fiduciaries know exactly what they are providing in their TDFs, and that they are serving the best interests of plan participants.

 

Reported by

Beaumont Capital Management has released a new white paper which digs into the specific details of the Department of Labor (DOL)’s new rules outlining fiduciary responsibility in regard to the management of target date funds (TDFs).

“The target date fund is one of the most commonly utilized offerings in 401(k) plans, and for good reason,” says Dave Haviland, BCM’s Managing Partner and Portfolio Manager, and author of the new whitepaper. “For the participant, they are a straightforward way to start investing for retirement. However, since the failures of many first-generation TDFs, including their performance in the 2008 market downturn, the DOL has a close watch on this class of funds. TDFs can no longer live in a ‘set-it-and-forget-it’ era, and the DOL has taken steps to assure that plan fiduciaries know exactly what they are providing in their TDFs and that they are serving the best interests of plan participants.”

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The white paper titled “Questions a Fiduciary must be able to answer about their Target Date Funds,” also offers guidance on how TDFs should be approached to meet federal compliance requirements and ensure that plan participants’ best interests are being met, the firm says.

According to Beaumont Capital, the paper provides insights on how to create an objective, documented process for comparing, selecting, and reviewing TDFs; and how to understand funds’ investment mixes as well as the risks involved. The company notes that equity ownership across TDFs can vary as much as nearly 50% in some cases. It adds that “not all bonds in TDFs are the same and many are not the more conservative position typically sought to balance portfolio risk.”

The paper also attempts to help plan fiduciary’s determine whether base expenses are appropriate for the services provided with an emphasis on sustainability and value, and to examine if TDFs are designed to avoid large losses and get defensive in times of market failures.

The white paper states, “Index-based TDFs offer little to no protection against large losses. Dynamic TDFs can. The key is to discuss the options with the sponsor/employees and document their (now) informed preference.”

Beaumont Capital also points out that “In 2008, the three largest 2010 TDFs lost between 21-27%. Those major losses changed the lives and plans of those about to start their retirements in ways that no one wants to see happen again.”

Moreover, the paper explores the question of effective participant communication, which the firm says will become no longer just a goal, but a requirement starting at the beginning of the relationship with a participant.

“We strongly support the DOL’s actions and believe that all retirement plan professionals must be fully aware of their increased fiduciary responsibilities,” says Haviland. “Target date funds will continue to be a popular option, often accounting for as much as ¾ of the plan assets, but participants must have the confidence and assurance that they are being well guided and fully informed in their investment decision-making.”

Beaumont Capital’s white paper “Questions a Fiduciary must be able to answer about their Target Date Funds” can be found online here. 

«