CEFEX Offers Due Diligence Reports on Advisers and Providers

CEFEX announced a new way for plan sponsors, investment committee members and individual investors to obtain due diligence reports on their advisers and service providers.

The new CEFEX Independent Assessment Report (IAR) contains a description of CEFEX’s rigorous annual assessment including the standard and assessment methodology applied, the date and the people involved.

For plan sponsors, the IAR offers a method to document the selection and monitoring of their service providers, thereby helping them fulfill their fiduciary obligations. The IAR serves as a comprehensive expert analysis, which should be stored in their fiduciary file as a permanent record.

The IAR is a feature exclusively available to CEFEX certified advisers in the U.S. and internationally, third-party administrators (TPAs) and recordkeepers to help communicate the significance of the CEFEX assessment to clients. The new reports are available for renewal assessments conducted after May 1, 2019.

The CEFEX assessment is based on the standard described in the handbook: “Prudent Practices for Investment Advisors”, recently updated by Fi360 Inc. In the case of recordkeepers and TPAs, it is based on the “Standard for Retirement Plan Service Providers” published by CEFEX and the American Society for Pension Professionals and Actuaries (ASPPA).

According to the Department of Labor, retirement plan fiduciaries can limit their liability by implementing prudent practices including establishing a prudent process, maintaining records and documenting decisions. Plan sponsors have a duty to monitor retirement plan advisers, but may be forgetting to request or research certain information.