grow your 401(k) business in 2015 - july business services• roots as certified public accountants...

Grow Your 401(k) Business in 2015

Thank you Breakfast Sponsors

A Brief History

• Firm Founded in 1994 by Jim Hudson and John Humphrey

• Same Ownership for nearly 20 Years • Roots as Certified Public Accountants

Firm Profile

• 2,800+ Clients / $2.5 Billion in Assets • 100,000 Participants • 160 Employees • 40+ Certifications (ASPPA, QKA, AIF) • SSAE 16 Audited • CEFEX Certifications

July Business Services 2015 Advisor Symposium

Washington Update

Presented by: Charles Lockwood, J.D., LL.M.

ASC Institute, LLC [email protected]

o Congress raised debt ceiling to $18.113 trillion Will probably hit limit sometime in

November or December

o With Republicans in control = will probably want to pass legislation before Presidential election begins

o Important election for Congress = 35 seats up for re-election in Senate (25 Republican)

Tax Reform / Pension Reform

Will we see tax

reform this year?

Major proponents of tax reform, Congressman

Camp and Senator Baucus both stepping down o Senator Orrin Hatch (R-Utah) will be Chairman of

Finance Committee and Paul Ryan (R-Wis) will be Chairman of House Ways and Means Committee

Tax Reform Act of 2014

o Would reduce limit on

401(k) deferrals to 50% of current 402(g) limit ($18,000 for 2015)

o Additional amounts could be contributed as Roth contributions Would only apply to large

plans (> 100 EEs) Plans would be required to

offer Roth contributions Would raise $143.7 billion

of revenue


Congressmen Dave Camp released draft of Tax Reform Act of 2014 Will be used as guide towards tax reform in 2015

o Would apply 10 year freeze

on cost of living increases $62 billion in revenue

o Would eliminate “stretch” IRAs/DC plans RMDs within 5 years of

original owner's death Exception for surviving

spouse and minor children

o Would eliminate SEPs and SIMPLE plans (would raise $600 million in revenue)



o Double tax on DC contribs. Marginal tax rates reduced

to 10% and 25% = adds new 10% tax for earnings in excess of $400k ($450k for joint filers) of modified AGI

AGI for this purpose is modified by INCLUDING pre-tax contributions to DC plans

Effect is to double tax plan contributions = once when contributed and again when distributed



o Eliminate special tax break for NUA Protect for participants who

are age 50 or older by end of 2015

o Limit Roth conversions to pretax dollars Would prohibit conversion

of after-tax IRA accounts to Roth IRAs

o Modify RMD rules for Roth IRAs to require RMDs at age 70½

Pension Reform

Number of retirement provisions under 2016 Obama budget proposal

o Would eliminate “stretch”

IRAs/DC plans Budget proposal estimates

would save $5.5 billion over next decade

o Allow non-spouse beneficiary to complete 60-day rollovers into inherited IRAs

o Lifetime cap on retirement benefits Based on amount necessary

to fund maximum 415 benefit at age 62


Pension Reform

o Cap deduction limit for

itemized deductions to 28%, including retirement plans Mainly affect individuals

earning above $200,000 and married couples earning above $250,000

Would presumably create basis that would have to be tracked

Largest revenue raiser in budget proposal = estimated revenue close to $600 billion over next decade

Pension Reform


o Create exception to 10% early distribution penalty for long-term unemployed Exception would apply to

IRAs and qualified plans Individual would have to be

unemployed for more than 26 weeks and be receiving unemployment compensation

o Require plans to allow EEs who have worked at least 500 hours for 3 consecutive years to make deferrals

Pension Reform


o Automatic IRAs Applies to ERs with more

than 10 EEs that have been in business for at least two years and do not maintain another qualified plan

In absence of election, EEs would automatically be enrolled at a default rate of 3% under a Roth IRA

Legislation has been introduced in both House and Senate to implement automatic IRAs

Pension Reform


IRA Rollovers

Allows EEs to separate after-tax contributions from pre-tax contributions in applying tax rules upon distribution or rollover

Rollover of After-Tax Contributions

IRS recently issued guidance on taxation/ rollover of after-tax contributions, including Roth contributions

Notice 2014-54 allows EEs to take after-tax money first without including pre-tax contributions

Has focused great deal of interest on advantages of making after-tax contributions to qualified plans

Voluntary after-tax contributions o Earnings are pretax (taxable)

Roth contributions/rollovers/conversions o If qualified distribution = entire amount is not

taxable o If nonqualified distribution = earnings are taxable

Repayment of deemed distribution Buy back following cash-out = rehired EEs Recharacterized deferrals after failed ADP Current cost of life insurance protection

After-Tax Contributions (Basis)

Any distribution of after-tax contributions (basis) must include a pro-rata portion of basis and pre-tax contributions

Example. Joe has A/B of $100,000 ($20,000 basis, $80,000 pre-tax). Joe wants to rollover $80,000 to IRA and take his $20,000 without tax impact. Is that possible? o Each “distribution” must include pro-rata portion of

basis/pre-tax contributions o Of $20,000 distribution = $16,000 would be taxable

(80/100) as recovery of pre-tax contributions

Old Basis Recovery Rules

Effect of basis recovery rules o Portion of distribution is taxable o Taxable portion is subject to 20% withholding if not

directly rolled over o Taxable portion subject to 10% premature

distribution penalty

Separate contract theory = can apply basis recovery only to after-tax account o Must maintain separate account for after-tax

contributions (and earnings on those amounts) o Roth accounts always treated as separate contract

Old Basis Recovery Rules

Generally rollover of contributions is not taxable o If convert pre-tax contributions to Roth = EE must

pay taxes on conversion

May rollover after-tax contributions to IRA (either direct or 60-day rollover)

May directly rollover to qualified plan if will separately account for after-tax amounts (including basis) o May not do 60-day rollover of after-tax amounts to

a qualified plan

Rollover Rules

Any rollover to IRA must include pro-rata portion of pre-tax contributions and basis

If distribution made to different vehicles = each portion of distribution must include pre-tax amounts and basis

Caused problems where employees wanted to rollover only pre-tax portion of distribution or wanted to rollover after-tax amount to Roth IRA

Problem with Basis Recovery Rules

Notice 2014-54 provides that all distributions made at the same time are treated as a single distribution

If pre-tax contributions is less than amount being directly rolled over = entire amount rolled over is treated as pre-tax

If rolling over to multiple IRAs = employee may designate where pre-tax/basis is assigned

Notice 2014-54

Joe has $50,000 of after-tax contributions ($30,000 basis, $20,000 earnings) in separate account. Joe wants to take out $50,000 and rollover $20,000 to IRA and take $30,000 without tax impact. Is that possible? o All “distributions” made at same time are treated as

single distribution o If distributing both pre-tax and after-tax

contributions = rollover first treated as pre-tax o $30,000 rolled to IRA is treated as pre-tax

contribution and $20,000 distribution is recovery of basis = no taxation to Joe

Example of New Guidance

Suppose in prior example = Joe wanted to roll $30,000 to Roth IRA. Can he do so without tax consequences?

Under new guidance, Joe can decide which IRA to send after-tax so can covert after-tax to Roth IRA without tax consequences

Example

o Wall Street Journal and other publications have pushed a new planning opportunity

o Have HCEs make after-tax contributions to plan so that upon retirement can rollover those amounts to Roth IRA with no tax consequences

o Does this work? Be careful of ACP test Will work well in “Owners-Only” plans or where no NHCEs

“Backdoor” Roth Do new rules provide an opportunity for employees

to maximize contributions to qualified retirement plans?

Hardship Distributions

Modifies correction process for overpayments

o Allows ER to make plan whole without demanding repayment from participant

Must ER repay overpayment to plan if makes improper hardship distribution?

Is documentation required for SH hardship? o In recent Employee Plans News, IRS stated plan

sponsor must obtain and keep hardship records o Failure to have records available for examination is

qualification failure corrected under EPCRS

Rev. Proc. 2015-27

IRS guidance seems to be direct response to

recent “electronic self-certification” program implemented by large TPA o Records should be retained in paper or electronic

format, including documentation that substantiates EE’s immediate and heavy financial need

o Documentation to support hardship distribution was properly made in accordance with plan and Code

o Proof of actual distribution and related Form 1099-R Not sufficient for plan participants to keep

their own records of hardship distributions Electronic self-certification is not sufficient

Documentation Requirement

Employee Plan News article also advises ERs

to keep documentation on plan loans o Records should be maintained in paper or electronic

format for each plan loan granted to a participant, including evidence of loan application

o If applicable, documentation verifying loan proceeds were used to purchase primary residence If loan will exceed 5 years, should receive

documentation regarding purchase of primary residence before loan approved

Self-certification not permissible to document eligibility for primary residence loan exception

Documentation Requirement

EPCRS Update

If plan is disqualified, substantial tax consequences may apply for “open” years

Tax consequences include: o Taxation to participants o Taxation of trust o Loss of deduction o Loss of rollover opportunity for participants

Special rule applies if plan fails coverage or nondiscrimination

Consequences of Disqualification

Employee Plans Correction Resolution

Program (EPCRS) = Rev. Proc. 2013-12 3 correction programs:

o SCP (Self-Correction Program) = no IRS submission o VCP (Voluntary Correction Program) = submission

to IRS before being caught o Audit CAP (Audit Closing Agreement Program) =

caught by IRS Generally too late for EPCRS

IRS issued list of top mistakes/corrections www.irs.gov/pub/irs-tege/401k_mistakes.pdf

IRS Voluntary Correction Program

4 types of disqualifying defects Plan document failures (e.g., failure to make good

faith or interim amendments) Must use VCP to correct failure

Operational failures = failure to follow terms of plan May use SCP or VCP to correct failure

Demographic failure (e.g., coverage/ nondiscrimination) Must use VCP to correct failure

Employer eligibility failure Must use VCP to correct failure

EPCRS Program

Provides new SH correction method for failure

to implement automatic contributions o If do not properly begin withholding automatic

deferrals = no corrective QNEC required if correct error within 9½ months after end of PY or date ER is notified of failure, if earlier Ties into filing deadline for Form 5500

o ER must send notice to affected EEs detailing correction within 45 days after correction

o ER must make QNEC for missed match, plus earnings, by end of 2nd plan year following failure

o Correction option expires 12/31/2020 unless extended

Rev. Proc. 2015-28

New correction options for elective deferral

failures unrelated to automatic contributions o If missed deferrals begin within 3 months from date

of failure = not corrective QNEC required

o If deferral failure extends beyond 3 months (but not beyond end of second plan year) = corrective QNEC equal to 25% (instead of 50%) of missed deferral

o ER must send 45-day notice to affected EEs

o ER must make QNEC for missed match, plus earnings, by end of second PY following failure

Rev. Proc. 2015-28

Plan Documents

Recent IRS Guidance Announcement 2014-16

o Announces opening of two-year restatement period for pre-approved DC plans beginning 5/1/14

Rev. Proc. 2013-22 / Rev. Proc. 2014-28 o Establishes pre-approval program for 403(b) plans

and extends submission period until 4/30/15 o IRS issued updated LRMs in March 2015

Rev. Proc. 2015-36 o Extends period for submitting pre-approved DB plans

to IRS, including cash balance plans, until 10/30/15 o Adds ESOPs as pre-approved plans under next cycle

Determination Letter Program IRS will no longer issue determination letters

for identical adopters of pre-approved plans o If modify document outside of Describe lines = may

submit on Form 5300

IRS will only issue determination letters for VS plans that have been “modified” o Use of approved Describe lines should not be

treated as “modification” to plan if meet parameters

• IRS has stated informally will be eliminating determination letter program, except upon initial adoption or termination of plan

Why Exchange Traded Funds Make Sense in 401k Plans

Important Information

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Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund’s before investing. To obtain a prospectus containing this and other important information, please call 1-866-909-WISE (9473) or visit wisdomtree.com to view a prospectus online. Read the prospectus carefully before you invest. There are risks associated with investing, including possible loss of principal. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Funds focusing their investments on certain sectors and/or smaller companies increase their vulnerability to any single economic or regulatory development and generally experience greater price volatility. Investments in emerging, offshore or frontier markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation, intervention and political developments. Due to the investment strategy of the WisdomTree Emerging Markets Equity Income Fund it may make higher capital gain distributions than other ETFs. Investments in real estate involve additional special risks, such as credit risk, interest rate fluctuations and the effect of varied economic conditions. Please read each Fund’s prospectus for specific details regarding each Fund’s risk profile.

Neither WisdomTree Investments, Inc. nor its affiliates, nor Foreside Fund Services, LLC and its affiliates provide tax advice. All references to tax matters or information provided on this site are for illustrative purposes only, and should not be considered tax advice and cannot be used for the purpose of avoiding tax penalties. Investors seeking tax advice should consult an independent tax advisor.

WisdomTree Funds are distributed by Foreside Fund Services, LLC.

WIS006261 2/2015

1In some circumstances, an index mutual fund may be subject to lower fund expenses than an ETF. 2Investment style defines how the fund is managed, with passive management tracking the performance of indexes and active management run by an investment manager. 3Holding Transparency: Exchange traded funds have their holdings visible on a daily basis. Diversification does not eliminate the risk of experiencing investment losses. ETF shares are not sold or bought at their net asset value (NAV) like mutual fund shares. ETF shares’ market price may be at, above or below the funds’ NAV. The NAV of the fund will fluctuate with changes in the market value of its portfolio holdings, and the market price of an ETF’s shares will fluctuate with changes in the NAV as well as supply and demand in the market for the shares. The market price of ETF shares may differ significantly from their NAV during periods of market volatility. ETF shares may only be redeemed directly with the fund at NAV by Authorized Participants, in very large redemption/creation units.

Exchange Traded Funds (ETFs): Similar Characteristics of Two Familiar Investment Ideas Obviously, there are many differences between mutual funds, stocks and ETFs, but they do share some similar characteristics.

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ETFs are typically exchange tradable during the day, as are individual stocks, but it’s important to note that ETFs are subject to risk similar to those of stocks including those regarding short-selling and margin account maintenance.

Individual Stocks

Diversified basket of securities, like a mutual fund, that typically trades on

exchanges intraday, like a stock.

ETFs

ETFs are typically diversified baskets of securities like mutual funds.

Mutual Funds

While individual stocks offer ownership shares in individual companies and don’t have expense ratios, they also are subject to unique company-specific risks and are not diversified. ETFs and Mutual Funds both offer diversification and we compare some of their other characteristics below.

1Active: approach that does not seek to track returns of an underlying index after costs, fees and expenses. 2Sources: WisdomTree, Bloomberg. (12/31/13) 3Brokerage or commission fees may apply 4Revenue sharing refers to agreements in place where part of a fund expense ratio is paid to give an investment option, such as a mutual fund, eligibility for investment on a particular platform.

Introduction to ETFs

Trades when markets are open, like individual stocks • Investors therefore know the price of the shares of their ETF during the trading day

Able to Accommodate a Diverse Array of Investment Strategies • Can track the returns of an underlying Index or can follow a more active1 approach • Typically lower expense ratios as opposed to active1 mutual funds

ETFs Offer Potential Benefits • Wide product offering – approximately 1,500 ETFs are available2 • Know underlying holdings each day • No minimums, redemption fees or holding restrictions3 • No revenue sharing4

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Past performance does not guarantee future results. Diversification does not eliminate the risk of experiencing investment losses. Transactions in shares of WisdomTree ETFs may result in brokerage commissions.

Why Might Financial Professionals Use ETFs? Similar to mutual funds, there are some ETFs that deliver strong performance over

certain periods of time and there are some that do not. Neither approach outperforms the other in all cases at all times.

Specific sector and country ETFs exist, allowing investors to have the potential to garner precise exposure based on a particular view

While not always cheaper than every mutual fund, many ETFs do in fact have lower expense ratios than many mutual funds

The ETF structure has the potential for tax efficiency

Many ETFs can offer a diversified basket of underlying assets

ETFs can be traded at any point in time when the market is open

At the end of each day, an investor in an ETF knows the underlying assets held by the ETF

Holdings are displayed daily on the website

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Diversification

Tradability and flexibility

Cost effectiveness

Tax efficiency

Transparency

Performance

Express a view

Sources: WisdomTree, Morningstar Direct as of 1/9/2014. 1U.S. Large Cap: Contains the U.S. listed Mutual Funds, ETFs and WisdomTree ETFs respectively that fit within Morningstar’s U.S. Large Value, Large Blend or

Large Growth categories. 2U.S. Mid Cap: Contains the U.S. listed Mutual Funds, ETFs and WisdomTree ETFs respectively that fit within Morningstar’s U.S. Mid Value, Mid Blend or Mid

Growth categories. 3U.S. Small Cap: Contains the U.S. listed Mutual Funds, ETFs and WisdomTree ETFs respectively that fit within Morningstar’s U.S. Small Value, Small Blend or

Small Growth categories. 4Foreign Large Cap: Contains the U.S. listed Mutual Funds, ETFs and WisdomTree ETFs respectively that fit within Morningstar’s Foreign Large Value, Foreign

Large Blend or Foreign Large Growth categories. 5Foreign Mid/Small Cap: Contains the U.S. listed Mutual Funds, ETFs and WisdomTree ETFs respectively that fit within Morningstar’s Foreign Mid/Small Cap

Value, Foreign Mid/Small Cap Blend or Foreign Mid/Small Cap Growth categories. 6Diversified Emerging Markets: Contains the U.S. listed Mutual Funds, ETFs and WisdomTree ETFs respectively that fit within Morningstar’s Diversified

Emerging Markets category. 7Median Fees: Calculated as the median net expense ratio by prospectus as the most recent prospectus as of 1/9/2014. The median was used as

opposed to the average so as to not allow mutual funds with high expense ratios or ETFs with low expense ratios to have undue influence on the ultimate number shown. The median calculation is not impacted by extreme values, either to the higher or low end.

ETFs Have the Potential to Be Less Expensive than Mutual Funds

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ETFs Are Increasingly Offered as Investment Options Within Retirement Plans

Options, Options & More Options: The Crux of the matter is that ETFs and Mutual funds represent an increasingly wide array of different investment strategies. Since every investor has different goals and risk tolerances, the increasing array of options is important in helping to accomplish these needs.

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ETFs + Mutual Funds

Transparency of Holdings on a Daily Basis

Operational Improvements

Know What is Owned…Daily: Many times, plan participants are unable to see what their investment options are holding on a daily basis. With ETFs, holdings can be accurately assessed daily. This could help investors to align their choices with their goals and risk tolerances.

Breaking from Tradition: Since mutual funds arrived before ETFs onto the investment landscape, retirement plans became accustomed to allocating assets solely at the end of a given trading day when mutual funds price their net asset values based on the behavior of their underlying holdings through the day. Even though ETFs do not price their shares in the same manner, solutions are beginning to proliferate that allow ETFs to be traded in these plans.

Retirement Plan Implementation: What Might Participants See?

Individual ETFs as Investment Options • Retirement plans are required to make available the list of investment options • Offer participants the opportunity to reassess their choices to make sure that

they’re still congruent with their investment goals • Participants might see ETFs as options to be chosen from the list.

Model Portfolios of Multiple ETFs • Participants may not be able to comfortably analyze the differences between

individual ETF options • Terms like “Aggressive”, “Conservative” or “Moderate” in terms of their risk

tolerance might be easier • Model portfolios will likely use multiple underlying ETFs to execute on these

themes • Typically rebalance so that the top performing ETFs within the model do not

end up dominating the exposure

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Conclusion

As the landscape of investment options changes, it’s important to understand how this could impact the ability of investors to realize their goals

ETFs have certain attributes that might be attractive to retirement plan participants

Retirement plans with ETFs as potential options are growing in number

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Thank you Break Sponsors

FOR MORE INFORMATION CALL 800.368.4410 OR VISIT www.amgfunds.com PT323-MC-0215

F O R I N V E S T M E N T P R O F E S S I O N A L U S E O N L Y

Retirement Readiness Why it matters to Employees, Plan Sponsors and Financial Advisors

Presented by: Chris Rodzen, Vice President | DCIO Channel Specialist

September 10, 2015



AMG Funds Overview

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► AMG Funds is a wholly owned subsidiary and the U.S. retail distribution arm of Affiliated Managers Group, Inc. (AMG)

— AMG is a global asset management company with investments in leading boutique investment management firms

► AMG Funds provides access to many of AMG’s boutique investment Affiliates through our family of mutual funds, separately managed accounts, alternative funds and asset-allocation products

— In addition, we oversee and distribute a number of complementary mutual funds subadvised by unaffiliated investment managers

► We also offer exclusive, turnkey, globally diversified, asset-allocation investment solutions through ManagersChoice™ in two series of models:

— Capital Appreciation — Income

1 As of December 31, 2014



What we Know

► Investors are living longer and are more responsible for their retirement savings than ever before

► An aging workforce affects corporate profitability

► Financial Advisors can strengthen their value proposition by addressing retirement readiness

2

The views expressed represent the opinions of AMG Funds and are not intended as a forecast of future results.



Retirement “Age Wave”

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Source: 2012 U.S. Census data



Life Expectancy

Year Male Female

19901 78 84

20142 84 87

1National Center of Health Studies 2ssa.gov

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Life Expectancy if you Are Age 65



Pension Coverage

Source: Center for Retirement Research (based on the Federal Reserve’s 1983 and 2010 Surveys of Consumer Finances).

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Workers with Pension Coverage by Type of Plan



Retirement Income: Total Household Retirement Savings

BASE: All Qualified Respondents Q1300 Approximately how much money does your household have saved in all of your retirement accounts? © Transamerica Center for Retirement Studies, 2012

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Workers’ reported levels of household retirement savings increase by age range. Overall, slightly more than one-third have saved less than $50,000. Of concern, a number of workers in their forties, fifties and sixties have saved less than $50,000 and have less time to take additional steps to build their savings than younger workers. * Employee Benefit Research Institute states that, as of year end 2013, average account balance was $72,383, median was $18,433. Approximate Household Savings in all Retirement Accounts



Paying for Retirement

Source: Social Security Administration, 2010 Income of the Aged Chartbook, Released: March 2012. (These percentages are based on those age 65 and up with at least $57,957 in annual income in 2010.)

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Average Income Source (Age 65+)



Workers Adjusting Expectations of Retirement

BASE: All Qualified Respondents Q1300 Approximately how much money does your household have saved in all of your retirement accounts? © Transamerica Center for Retirement Studies, 2012

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The majority of workers (56 percent) expect to work past age 65 or do not plan to retire. Further, the majority of workers (54 percent) plan to work after they retire. For many workers, the long-standing vision of fully retiring at age 65 has changed dramatically. Workers have begun to change their vision of retirement. Now, it’s time for the retirement industry, plan sponsors, media, and policy makers to offer a new definition of retirement readiness.

At What age do you expect to retire? Do you plan to work after you retire?



Why Retirement Readiness Matters to Plan Sponsors

3 Companies, 1,000 employees each Company 1 Company 2 Company 3

% of Workforce 60+ 30% 20% 10%

% of Workforce 40-60 45% 40% 35%

% of Workforce younger than 40 25% 40% 55%

Annual cost of health and DI premiums $6.1M $5.3M $4.4M

Source: PLANSPONSOR – A Successful Retirement Plan Promotes Corporate Profitability; 11/20/13.

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► Employee retention – more than half of employees would leave current employer for a nearly identical position with better benefits.

► Corporate Health Care Cost – retaining older workers results in higher cost; they typically have higher salaries and incur greater health care expenses.

► Loss of rising talent – promising employees looking to be promoted may leave if the firm is saturated with older workers.

► Productivity – employees who stick around based purely on financial need, are less likely to be engaged and therefore generate lower-quality work.



Why Retirement Readiness Matters to Advisors

1 Source: 12th Annual 401(k) Benchmarking Survey by Deloitte, the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialists 2 Source: 2014 Towers Watson North American Defined Contribution Plan Sponsor Survey Report

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► Priority for Plan Sponsors – according to a Deloitte survey, Retirement Readiness is top priority for 75% of all Plan Sponsors1. By addressing Retirement Readiness needs, Advisors put themselves in an advantageous position when vying for retirement business.

Only 12% of companies say their employees know how much to save, and just 20% believe their employees are comfortable making investment decisions.2

► Value Proposition – Advisors have the ability to solidify existing plan relationship

by enhancing their value proposition to address and include Retirement Readiness applications



Action Steps for Advisors

1 Source: United States Department of Labor – www.dol.gov

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► Statement of Services – create/revise your Statement of Services to bolster Retirement Readiness and communicate its value to your clients.

► Utilize Auto Features – auto-enrollment & auto-escalation have been shown to increase retirement savings.

Approximately 30 percent of eligible workers do not participate in their employer’s 401(k)-type plan. Studies suggest that automatic enrollment plans could reduce this rate to less than 15 percent, significantly increasing retirement savings.1

► Employee Education – research and implement strategies and resources to enhance employee education and communication.



Action Steps for Advisors (continued)

1 Source: Schwab Retirement Plan Services, Inc. survey; 11/16/10

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► Keep It Simple – optimize the number of investment choices and offer a turnkey risk-based model offering for those needing a “do it for me” type of solution.

► Matching Matters – evaluate the structure of the match to ensure greatest participation from employees (i.e. 50% match up to 6% as opposed to 100% match up to 3%.

Plan participation increases to 76 percent of all eligible employees when a 401(k) match is offered compared to 70 percent when no employer contribution is available.1



ManagersChoice Overview



ManagersChoice Retirement Plan Solution Overview

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► A sophisticated, yet easy-to-use, turnkey investment solution designed to help plan participants grow assets

► Provides risk-based global asset allocation and diversification

► Benefits from AMG Funds’ rigorous investment manager selection and due diligence processes

► Provides access to well-known institutional firms and exclusive boutique investment firms

► Fully supported by ManagersChoice Client Service Team

► Strategies typically reserved for high-net-worth investors are available to plan participants with no minimums

Some of our investment managers:



ManagersChoice Offers a Range of Model Portfolios

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Performance in Various Markets

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Model Portfolio Performance During Volatile Markets

6/30/06 – 3/31/09

3/31/10 – 6/30/10

3/31/11 – 9/30/11

ManagersChoice Conservative Model -13.53% 0.08% -1.28%

ManagersChoice Moderate Conservative Model -22.58% -2.93% -6.20%

ManagersChoice Moderate Model - QDIA eligible -28.24% -5.54% -9.63%

60% S&P 500 Index & 40% Barclays U.S. Aggregate Index -20.59% -5.52% -5.85%

S&P 500 Index -36.35% -11.43% -13.78%

Barclays U.S. Aggregate Index 4.19% 3.49% 6.20%

The past performance of a model is not a guarantee of future results. The performance of the underlying Funds comprising a model from time to time may have been affected significantly by material market and economic conditions, including interest rates, market trends, and general business and economic cycles, which may or may not be repeated in the future. From time to time the Fund’s advisor has waived fees or reimbursed expenses on some of the underlying Funds, which may have resulted in higher returns. Furthermore, the Funds comprising a model may be managed in the future using different investment strategies and asset allocations, which may affect the future performance results of such Funds. For all of these reasons, the value of a client account that is managed based upon a model may fluctuate and may be worth more or less than the value of the account when it first invests using the model. There can be no assurance that the use of any model to manage a client account will result in profitable returns. The blended benchmark shown does not represent an appropriate benchmark for any client’s use or the models shown. Please see the Blended Benchmark disclosure at the end of this presentation for important information. *Returns for periods greater than one year are annualized.

Total Returns for Periods Ending 06/30/14



The ManagersChoice Advantage

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Many advisors choose ManagersChoice for the following reasons:

► Transparent fee structure - no added management fee

► No account minimums

► ERISA 3(38) Co-fiduciary Services

► ManagersChoice Moderate Portfolio - QDIA eligible

► Fully supported; turnkey

► Access to leading institutional money managers, as well as exclusive investment firms

► Globally diversified allocations

► Research-driven investment process

► Range of models to meet the needs of a diverse employee base



Your AMG Funds Team

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Christopher J. Rodzen Vice President, DCIO Specialist 617.997.6278 [email protected]

Melissa Mosher Assistant Vice President, DCIO 484.530.3489 [email protected]

To learn more about our products go to https://readygo401K.macg/AMGFunds/



Disclosures

ManagersChoice Model Portfolios are asset-allocation models composed of various mutual funds (the “Funds”). The choice of Funds for each model and the weightings of such Funds within the model are designed to achieve the investment objectives of the model. The performance results of a model for any specified period reflect the weighted average monthly returns of the Funds that comprised the model during such period based upon the actual composition of the model as it existed from time to time throughout such period. The composition of each model, including the selected Funds and the weightings of such Funds, has changed periodically and is likely to change in the future. No representation is made that any particular model will in the future have the same investment characteristics as those shown. The performance results of a model for any period are hypothetical in nature and do not represent actual trading or the actual performance achieved by any particular client account that has been managed based upon the model during the same period. The actual performance achieved by a client account may be affected by a variety of factors, including the initial balance of the account; the timing and amount of any additions to or withdrawals from the account; changes made to the account to reflect the specific investment needs or preferences of the client; duration and timing of ManagersChoice program participation; and a client account’s risk tolerance, investment objectives and investment time horizon. In addition, the performance of a client account will be reduced by any fees charged by third parties for managing the account, which are not reflected in the performance results of any model. The model performance results do not reflect the deduction of investment advisory fees or the reinvestment of dividends and other earnings that are typically reflected in actual results. The client’s return will be reduced by the advisory fees, brokerage costs and any other expenses it may incur in the management of its advisory account. Investment advisory fees are described in Part II of the Financial Advisor’s Form ADV. The net effect of the deduction of fees on annualized performance, including the compounding effect over time, is determined by the relative size of the fee and the account’s investment performance. For example, for an account with a 2% fee, if

the gross performance is 10%, the compounding effect of the fees will result in a net performance of approximately 7.81%. There can be no assurance that the use of any model to manage a client account will result in profitable returns. A client account that is managed using a model will be subject to the risks associated with investing directly in the underlying Funds of the model, such as the risks associated with investing in fixed-income and derivative instruments, international or emerging markets, or in small- or mid-capitalization companies. Income from investments in tax-free, tax-managed and tax-aware funds may be subject to certain state and local taxes and, depending on your tax status, the Federal Alternative Minimum Tax. The prospectuses for the Funds may be obtained by calling 800.835.3879 or by visiting www.amgfunds.com. ManagersChoice is a mutual fund asset-allocation program sponsored by AMG Funds LLC. The past performance of a model is not a guarantee of future results. The performance of the underlying Funds comprising a model from time to time may have been affected significantly by material market and economic conditions, including interest rates, market trends, and general business and economic cycles, which may or may not be repeated in the future. From time to time the Fund’s advisor has waived fees or reimbursed expenses on some of the underlying Funds, which may have resulted in higher returns. Furthermore, the Funds comprising a model may be managed in the future using different investment strategies and asset allocations, which may affect the future performance results of such Funds. For all of these reasons, the value of a client account that is managed based upon a model may fluctuate and may be worth more or less than the value of the account when it first invests using the model. The volatility of the listed Index may be materially different from that of model or client’s account. In addition, the holdings of the mutual funds in the models may differ significantly from

the securities that comprise the Index. This Index has not been selected to represent appropriate benchmarks to compare the client’s performance, but rather is disclosed to allow for comparison of the models’ performance to that of a well-known and widely recognized Index and to show general economic and market conditions during the model periods. The S&P 500 Index is a capitalization-weighted index of 500 stocks. The Index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The S&P 500 Index is proprietary data of Standard & Poor’s, a division of McGraw-Hill Companies, Inc. All rights reserved. The Barclays U.S. Aggregate Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds. Unlike the Fund, the Barclays U.S. Aggregate Bond Index is unmanaged, is not available for investment and does not incur expenses. About Blended Benchmarks: The blended benchmark shown on page 5 is shown as an approximation of what the advisor believes to be as representative of a traditional balanced portfolio strategy. This blend is composed of two benchmarks, the S&P 500 Index and the Barclays U.S. Aggregate Bond Index, which the advisor believes are representative broad market indices. The blended benchmark shown does not represent an appropriate benchmark for any client’s use or any of the models shown.

19



Disclosures

Indices are unmanaged, not available for investment and do not incur expenses. Any sectors, industries, or securities discussed should not be perceived as investment recommendations. Diversification does not guarantee a profit or protect against a loss in declilning markets. Asset allocation does not protect against the risk of fluctuating prices and uncertain returns. The views expressed represent the opinions of AMG Funds and are not intended as a forecast or guarantee of future results. Investors should carefully consider the fund’s investment objectives, risks, charges and expenses before investing. For this and other information, please call 800.835.3879 or visit www.amgfunds.com for a free prospectus. Read it carefully before investing or sending money. Investment advisory services are offered by AMG Funds LLC, a wholly owned subsidiary and the U.S. distribution arm of Affiliated Managers Group, Inc.

20

Fiduciary Outsourcing Presented by: Rick Keast President Redhawk Wealth Advisors, Inc. (920) 327-0958 [email protected]

65

66

Background

Over 25 years of experience in the retirement industry. Mercer – Partner with largest benefits consulting firm.

KPMG - head consultant to Merrill Lynch. Retirement Plan Services – strategy, product and distribution. PAi – grew into a national firm - from less than 1,000 plans to

over 14,000 plans and $3B in assets over 7 years.

67

Fiduciary Outsourcing Agenda

Who is a Fiduciary under ERISA ERISA Litigation Proposed Fiduciary Rules How Fiduciaryk Can Help

68

Who is a Fiduciary Under ERISA

69

Fiduciary Duty

“A fiduciary duty is the highest duty of care in law and equity.” Serious business for a business owner!

70

Under ERISA – Who is a Fiduciary?

Who is a fiduciary? Plan must have at least one fiduciary - plan administrator. Anyone exercising discretion in the administration of the plan. All members of administrative committee.

What are the responsibilities? Act solely in interest of participants to provide

benefits. Carry out duties prudently. Follow the plan document. Diversify plan investments. Pay only reasonable plan expenses. Hiring and monitoring providers.

71

Fiduciary Liabilities

Fiduciaries are personally liable for plan losses caused by a breach of their ERISA fiduciary responsibilities and may be required to: Restore plan losses (including interest). Return ill-gotten gains. Pay the expenses relating to correction of inappropriate

actions (e.g. appraisals, calculations).

When Cogent asked “Retirement Planscape” responders about understanding plan fees, only 35% of sponsors at plans with less than $5 million in assets felt they understood their plan’s fees very well.

72

Investment Fiduciaries

What’s the difference between investment fiduciaries?

“What can we sell you?” Non-Fiduciary

Plan sponsor selects investments

Stock brokers, insurance agents, most banks, brokerage and insurance firms.

Fiduciary

73



ERISA

3(21)

Fiduciary

“We’ll help you do it”

Co-Fiduciary

Non-discretionary investment advisor

Only recommends list of investments

No legal responsibility or liability

Plan Sponsor selects investments

74



“We’ll do it for you”

Full Fiduciary

Discretionary investment manager

We select and monitor investments

Legal responsibility and liability

Examine fees – reasonable

E&O and Fiduciary Liability Insurance

ERISA

3(38)

Fiduciary

75

Mitigating Fiduciary Risk

76

Fiduciary Warranty – Gimmick/Protection?

Looks very official - a certificate and “official seal.” Like any warranty it includes terms and conditions

that limit the warranty. Go out of their way to make sure that they are not

identified as serving in a fiduciary capacity. Will only defend plan sponsors in rare instances. Typically only states that the investment options

selected were prudent and offer a broad range of investment alternatives. Cover such a small part of fiduciary liability and very

few cases are ever litigated on what is covered.

77


Early warranties covered the following…focused more on marketing than substance. Broad range of investment alternatives. Meeting ERISA’s Standard of Prudence. Appropriate for long-term investing.

In the beginning, the warranty programs never suggested they were taking the place of the plan sponsor and/or replacing the sponsor’s primary fiduciary status, responsibility, or liability. Focused on indemnification vs. rather than taking on fiduciary status.

78


The warranty solutions morphed into more clearly defined Fiduciary Guarantees… Must follow investment selection and evaluation

process. Helping employers meet the highest fiduciary

standard. Still no affirmative acceptance of fiduciary status.

79


Read the fine print…

“The warranty does not cover a claim or loss resulting from or related to fees and expenses of the program.” “While we can’t eliminate the fiduciary duty for plan sponsors, we are able to provide a level of support to help them feel more confident in their duties.” “We will pay (indemnify) for loss to the extent that such loss is not reimbursed by insurance or by any other source.” “We are committed to helping our employers meet the highest fiduciary standards for selection and monitoring of the investments they offer their 401(k) participants.”

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ERISA Litigation

81

Plenty of Litigation

ERISA settlements top $1.3B in 2014… ING - $15M settlement for revenue sharing Lockheed Martin – $62M settlement for excessive fees Fidelity – $12M settlement for excessive fees Ameriprise – $27.5M settlement for excessive fees MassMutual – $9.4M settlement for excessive fees Nationwide - $140M settlement for revenue sharing Northern Trust - $36M settlement for excessive fees AEGON - $40M excessive fee suit

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Tibble vs. Edison International

Supreme Court Case has Agreed to Hear Excessive Fee Case – Initially Filed in 2007 If Tibble Wins – Potential Floodgate to New Claims

Against Plan Sponsors Could Upend the Type of Investments Offered to 401(k)

Participants Used Retail Class Shares of 6 Mutual Funds – Menu of 40 Breach Because Lower Institutional Shares were

Available 3 Replacements Funds Introduced in 1999 3 Replacement Funds Introduced in 2002

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Tibble & Edison Opportunities Supreme Court rendered a decision on 5/18/2015 and the impact will be…

Monitor investments regularly. Scrutinize everything. Review investment fees and share classes. Will need to justify retail share classes. Review contracts with plan sponsors.

Supreme Court referred back to the common law of trusts, “which provides that a trustee has a continuing duty – separate and apart from the duty to exercise prudence in selecting investments at the outset – to monitor, and remove imprudent, trust investments.” The higher court then sent the case back to the 9th Circuit to consider the plaintiffs' claims.

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Even with 408(b)(2) - Disparity of Fees

BrightScope, 2015

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Proposed Fiduciary Rule

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Impact on Retirement Plan Advisors How will the DOL proposal affect a plan adviser's ability to get new business?

The transparency created by the DOL's proposed rule will increase the frequency of RFPs conducted in our space.

Will spark much-needed conversations between existing advisors and plan sponsors on fee models.

Will help honest plan advisors gain even more trust from their clients while also revealing dishonest advisor practices, spurring turnover in the space.

New contracts that the DOL proposal will require plan sponsors to sign will open doors for new advisors to enter.

Plan sponsors will need to acknowledge in writing all potential conflicts of interest, as well as their full understanding of their advisor's services and fees.

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How Fiduciaryk can Help

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Why Outsource Fiduciary Services

Your broker-dealer or RIA won’t let you serve in a fiduciary capacity.

You don’t want to take on the role. Plan sponsor wants to reduce their risk. Violation of prohibited transaction for rollovers. A lot of litigation in the press. Don’t want to be burdened with preparing quarterly

reports. Provides for better participant outcomes.

89

Advisor Benefits

Simple turn-key solutions Industry leading tools and full-service support Team of nationally renowned providers Comprehensive fiduciary oversight Professionally managed portfolios Diversified investment line-ups Comprehensive participant services Straightforward costs

Fiduciaryk – allows you to build better outcomes…

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Advisor Usage

You don’t have to affiliate with Redhawk. You don’t need to have a solicitors agreement with

Redhawk. If Redhawk is serving as the ERISA 3(38) Investment

Manager – agreement directly with the client. Your commissions flow through your broker-dealer as

normal. Your advisory fees flow through your RIA as normal.

Fiduciaryk – any advisor can use…

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Service Providers

Financial Advisor

Investment Fiduciary Services

Custodian & Trading

Recordkeeping &

Administration

Portfolio Managers

Overall plan support

Fiduciary outsourcing

services

Portfolio management

services

Plan design, recordkeeping, administration, and supplemental plan consulting services

Plan custodian, trading, and optional trustee services

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ERISA 3(38) Investment Manager

Fiduciary LineupsRedhawk Investment Committee

• Passive • Blended• Active• Custom

FeeBased

• 25bps • 50bps • Custom

CommissionBased

ETFsCITs

Mutual FundsCITs

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Fee Based Lineups

Custom core lineup created from Select List

Each core lineup contains 16 best - in - class funds…

Passive Core

Lineup – 0.24%

Blended Core

Lineup – 0.34%

Active Core

Lineup – 0.46%

Custom Core

Lineup

Select List

16 ETFs and CIFs 1 Best - in - Class ETF from Selected

Categories Portfolio Manager’s CIFs QDIA – Portfolio Manager’s

Appropriate Portfolio Quarterly Reporting

94

Commission Based Lineups

Each core lineup contains 16 best - in - class funds… 16 Mutual Funds Levelized Compensation 25bps and 50bps Commissions 1 Best - in - Class Mutual Funds from Selected

Categories Portfolio Manager’s CIFs QDIA – Portfolio Manager’s Appropriate

Portfolio Quarterly Reporting

Note: average expense ratios do not include portfolios.

Select List

25bps Core Lineup -

1.00%

Custom Core Lineup

50bps Core Lineup –

1.27%

95

Comprehensive Resources/Sales Support

96

Fiduciaryk Demo

www.fiduciaryk.com

http://www.fiduciaryk.com/

98

Patrick Delaney T. Rowe Price Investment Services, Inc. September 10, 2015

THE TRADITIONAL DC MINDSET SHIFTING YOUR DC MINDSET

THE BABY BOOMER 401(k) EXPERIENCE: 1981–2015

1981 2015

401(k)

Menu design 404(c)

Target risk funds

Auto-enrollment

Catch-up contributions

Target date funds as QDIAs

Retirement income

GENERATIONAL DEFINITIONS

In 2015, they are…

Baby Boomer 1946–64

Gen X 1965–81

Millennial 1982–95

76 million

59 million

80 million

age 51-69

age 34-50

age 20-33

"Baby Boomers vs. Millennials: Who Would You Rather Hire?". Time Magazine.

BUTTONED-UP VS. CASUAL

SUPER STAR VS. TEAM PLAYER

TECHNOLOGY: TOOL VS. LIFESTYLE

POTENTIAL OPPORTUNITIES

Build credibility with sponsors and drive better outcomes – Recommend plan design and service enhancements that cater to

frequent job changers

– Develop an effective rollover strategy to capture existing assets from previous employer plans

– Leverage social media tools; explore ways to build an online

community of employees within a plan – Engage with points of influence to develop a peer network; find

ways to incorporate peer benchmarking

THE RETIREMENT FOUNDATION IS DETERIORATING

SALARY UNEMPLOYMENT DEBT

AND THERE ARE MAJOR IMPEDIMENTS TO SAVING

SLOW AND STEADY TO BOOM AND BUST

Dot-Com Bubble

Real Estate Bubble

1981 1995 1996 2014

0

1,000

1,800

S&P

500

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Series 1

Series 2

Series 3

Series 5

135.76

129.55

131.27

136.57

132.87

132.59

131.21

130.92

122.79

116.18

121.89

126.35

122.55

120.4

113.11

111.96

116.44

111.88

109.61

107.09

119.51

120.42

133.71

138.54

140.64

145.3

148.06

152.96

164.42

162.39

168.11

162.56

164.04

166.07

163.55

166.4

164.93

163.41

157.06

159.18

160.05

150.55

153.18

150.66

166.68

166.1

166.09

163.58

167.24

179.63

181.18

180.66

179.83

189.55

191.85

190.92

188.63

182.08

189.82

202.17

211.28

211.78

226.92

238.9

235.52

247.35

250.84

236.12

252.93

231.32

243.98

249.22

242.17

274.08

284.2

291.7

288.36

290.1

305.63

318.66

329.8

321.83

251.79

230.3

247.08

257.07

267.82

258.89

261.33

262.16

273.5

272.02

261.52

271.91

278.97

273.7

277.72

297.47

288.86

294.87

309.64

320.52

317.98

346.08

351.45

349.15

340.36

345.99

353.4

329.08

331.89

339.94

330.8

361.23

358.02

356.15

322.56

306.05

307.02

322.22

330.22

343.93

367.07

375.22

375.35

389.83

371.16

387.81

395.43

387.86

392.46

375.22

417.09

408.79

412.7

403.69

414.95

415.35

408.14

424.21

414.03

417.8

418.68

431.35

435.71

438.78

443.38

451.67

440.19

450.19

450.53

448.13

463.56

458.93

467.83

461.79

466.45

481.61

467.14

445.77

450.91

456.5

444.27

458.26

475.49

462.69

472.35

453.69

459.27

470.42

487.39

500.71

514.71

533.4

544.75

562.06

561.88

584.41

581.5

605.37

615.93

615.93

636.02

640.43

645.5

654.17

669.12

670.63

639.95

651.99

687.31

705.27

757.02

740.74

786.16

790.82

757.12

801.34

848.28

885.14

954.29

899.47

947.28

914.62

955.4

970.43

980.28

1049.34

1101.75

1111.75

1090.82

1133.84

1120.67

957.28

1017.01

1098.67

1163.63

1229.23

1279.64

1238.33

1286.37

1335.18

1301.84

1372.71

1328.72

1320.41

1282.71

1362.93

1388.91

1469.25

1394.46

1366.42

1366.42

1498.58

1452.43

1420.6

1454.6

1430.83

1517.68

1436.51

1429.4

1314.95

1320.281474

1366.015163

1239.949375

1160.333094

1249.466752

1255.826305

1224.424735

1211.23191

1133.587889

1040.945708

1059.782356

1139.458051

1148.083064

1130.204614

1106.733428

1147.386508

1076.923961

1067.138096

989.814358

911.618998

916.073037

815.284643

885.762442

936.31

879.82

855.7

841.15

848.18

916.92

963.59

974.5

990.31

1008.01

995.97

1050.71

1058.2

1111.92

1131.13

1144.94

1126.21

1107.3

1120.68

1140.84

1101.72

1104.24

1114.58

1130.2

1173.82

1211.92

1181.27

1203.6

1180.59

1156.85

1191.5

1191.33

1234.18

1220.33

1228.81

1207.01

1249.48

1248.29

1280.08

1280.66

1294.83

1310.61

1270.09

1270.2

1276.66

1303.82

1335.85

1377.94

1400.63

1418.3

1438.24

1406.82

1420.86

1482.37

1530.62

1503.35

1455.27

1455.27

1473.99

1526.75

1549.38

1481.14

1468.36

1378.55

1330.63

1322.7

1385.59

1400.38

1280

1267.38

1282.83

1166.36

968.75

896.24

903.25

825.88

735.09

797.87

872.81

919.14

919.32

987.48

1020.62

1057.08

1036.19

1095.63

1115.1

1073.87

1104.49

1169.43

1186.69

1089.41

1030.71

1101.6

1049.33

1141.2

1183.26

1180.55

1257.64

1286.12

1327.22

1325.83

1363.61

1345.2

1320.64

1292.28

1218.89

1131.42

1253.3

1246.96

1257.6

1312.41

1365.68

1408.47

1397.91

1310.33

1362.16

1379.32

1406.58

1440.67

1412.16

1416.18

1426.19

1848.36

1805.81

1756.54

1681.55

1632.97

1685.73

1606.28

1630.74

1597.57

1569.19

1514.68

1498.11

Sheet1

Series 1Series 2Series 3Series 5

12/31/80135.76

1/31/81129.55

2/28/81131.27

3/31/81136.57

4/30/81132.87

5/31/81132.59

6/30/81131.21

7/31/81130.92

8/31/81122.79

9/30/81116.18

10/31/81121.89

11/30/81126.35

12/31/81122.55

1/31/82120.40

2/28/82113.11

3/31/82111.96

4/30/82116.44

5/31/82111.88

6/30/82109.61

7/31/82107.09

8/31/82119.51

9/30/82120.42

10/31/82133.71

11/30/82138.54

12/31/82140.64

1/31/83145.30

2/28/83148.06

3/31/83152.96

4/30/83164.42

5/31/83162.39

6/30/83168.11

7/31/83162.56

8/31/83164.04

9/30/83166.07

10/31/83163.55

11/30/83166.40

12/31/83164.93

1/31/84163.41

2/29/84157.06

3/31/84159.18

4/30/84160.05

5/31/84150.55

6/30/84153.18

7/31/84150.66

8/31/84166.68

9/30/84166.10

10/31/84166.09

11/30/84163.58

12/31/84167.24

1/31/85179.63

2/28/85181.18

3/31/85180.66

4/30/85179.83

5/31/85189.55

6/30/85191.85

7/31/85190.92

8/31/85188.63

9/30/85182.08

10/31/85189.82

11/30/85202.17

12/31/85211.28

1/31/86211.78

2/28/86226.92

3/31/86238.90

4/30/86235.52

5/31/86247.35

6/30/86250.84

7/31/86236.12

8/31/86252.93

9/30/86231.32

10/31/86243.98

11/30/86249.22

12/31/86242.17

1/31/87274.08

2/28/87284.20

3/31/87291.70

4/30/87288.36

5/31/87290.10

6/30/87305.63

7/31/87318.66

8/31/87329.80

9/30/87321.83

10/31/87251.79

11/30/87230.30

12/31/87247.08

1/31/88257.07

2/29/88267.82

3/31/88258.89

4/30/88261.33

5/31/88262.16

6/30/88273.50

7/31/88272.02

8/31/88261.52

9/30/88271.91

10/31/88278.97

11/30/88273.70

12/31/88277.72

1/31/89297.47

2/28/89288.86

3/31/89294.87

4/30/89309.64

5/31/89320.52

6/30/89317.98

7/31/89346.08

8/31/89351.45

9/30/89349.15

10/31/89340.36

11/30/89345.99

12/31/89353.40

1/31/90329.08

2/28/90331.89

3/31/90339.94

4/30/90330.80

5/31/90361.23

6/30/90358.02

7/31/90356.15

8/31/90322.56

9/30/90306.05

10/31/90307.02

11/30/90322.22

12/31/90330.22

1/31/91343.93

2/28/91367.07

3/31/91375.22

4/30/91375.35

5/31/91389.83

6/30/91371.16

7/31/91387.81

8/31/91395.43

9/30/91387.86

10/31/91392.46

11/30/91375.22

12/31/91417.09

1/31/92408.79

2/29/92412.70

3/31/92403.69

4/30/92414.95

5/31/92415.35

6/30/92408.14

7/31/92424.21

8/31/92414.03

9/30/92417.80

10/31/92418.68

11/30/92431.35

12/31/92435.71

1/31/93438.78

2/28/93443.38

3/31/93451.67

4/30/93440.19

5/31/93450.19

6/30/93450.53

7/31/93448.13

8/31/93463.56

9/30/93458.93

10/31/93467.83

11/30/93461.79

12/31/93466.45

1/31/94481.61

2/28/94467.14

3/31/94445.77

4/30/94450.91

5/31/94456.50

6/30/94444.27

7/31/94458.26

8/31/94475.49

9/30/94462.69

10/31/94472.35

11/30/94453.69

12/31/94459.27

1/31/95470.42

2/28/95487.39

3/31/95500.71

4/30/95514.71

5/31/95533.40

6/30/95544.75

7/31/95562.06

8/31/95561.88

9/30/95584.41

10/31/95581.50

11/30/95605.37

12/31/95615.93615.93

1/31/96636.02

2/29/96640.43

3/31/96645.50

4/30/96654.17

5/31/96669.12

6/30/96670.63

7/31/96639.95

8/31/96651.99

9/30/96687.31

10/31/96705.27

11/30/96757.02

12/31/96740.74

1/31/97786.16

2/28/97790.82

3/31/97757.12

4/30/97801.34

5/31/97848.28

6/30/97885.14

7/31/97954.29

8/31/97899.47

9/30/97947.28

10/31/97914.62

11/30/97955.40

12/31/97970.43

1/31/98980.28

2/28/981049.34

3/31/981101.75

4/30/981111.75

5/31/981090.82

6/30/981133.84

7/31/981120.67

8/31/98957.28

9/30/981017.01

10/31/981098.67

11/30/981163.63

12/31/981229.23

1/31/991279.64

2/28/991238.33

3/31/991286.37

4/30/991335.18

5/31/991301.84

6/30/991372.71

7/31/991328.72

8/31/991320.41

9/30/991282.71

10/31/991362.93

11/30/991388.91

12/31/991469.25

1/31/001394.46

2/29/001366.421366.42

3/31/001498.58

4/30/001452.43

5/31/001420.60

6/30/001454.60

7/31/001430.83

8/31/001517.68

9/30/001436.51

10/31/001429.40

11/30/001314.95

12/31/001320.28

1/31/011366.02

2/28/011239.95

3/31/011160.33

4/30/011249.47

5/31/011255.83

6/30/011224.42

7/31/011211.23

8/31/011133.59

9/30/011040.95

10/31/011059.78

11/30/011139.46

12/31/011148.08

1/31/021130.20

2/28/021106.73

3/31/021147.39

4/30/021076.92

5/31/021067.14

6/30/02989.81

7/31/02911.62

8/31/02916.07

9/30/02815.28

10/31/02885.76

11/30/02936.31

12/31/02879.82

1/31/03855.70

2/28/03841.15

3/31/03848.18

4/30/03916.92

5/31/03963.59

6/30/03974.50

7/31/03990.31

8/31/031008.01

9/30/03995.97

10/31/031050.71

11/30/031058.20

12/31/031111.92

1/31/041131.13

2/29/041144.94

3/31/041126.21

4/30/041107.30

5/31/041120.68

6/30/041140.84

7/31/041101.72

8/31/041104.24

9/30/041114.58

10/31/041130.20

11/30/041173.82

12/31/041211.92

1/31/051181.27

2/28/051203.60

3/31/051180.59

4/30/051156.85

5/31/051191.50

6/30/051191.33

7/31/051234.18

8/31/051220.33

9/30/051228.81

10/31/051207.01

11/30/051249.48

12/31/051248.29

1/31/061280.08

2/28/061280.66

3/31/061294.83

4/30/061310.61

5/31/061270.09

6/30/061270.20

7/31/061276.66

8/31/061303.82

9/30/061335.85

10/31/061377.94

11/30/061400.63

12/31/061418.30

1/31/071438.24

2/28/071406.82

3/31/071420.86

4/30/071482.37

5/31/071530.62

6/30/071503.35

7/31/071455.271455.27

8/31/071473.99

9/30/071526.75

10/31/071549.38

11/30/071481.14

12/31/071468.36

1/31/081378.55

2/29/081330.63

3/31/081322.70

4/30/081385.59

5/31/081400.38

6/30/081280.00

7/31/081267.38

8/31/081282.83

9/30/081166.36

10/31/08968.75

11/30/08896.24

12/31/08903.25

1/31/09825.88

2/28/09735.09

3/31/09797.87

4/30/09872.81

5/31/09919.14

6/30/09919.32

7/31/09987.48

8/31/091020.62

9/30/091057.08

10/31/091036.19

11/30/091095.63

12/31/091115.10

1/31/101073.87

2/28/101104.49

3/31/101169.43

4/30/101186.69

5/31/101089.41

6/30/101030.71

7/31/101101.60

8/31/101049.33

9/30/101141.20

10/31/101183.26

11/30/101180.55

12/31/101257.64

1/31/111286.12

2/28/111327.22

3/31/111325.83

4/30/111363.61

5/31/111345.20

6/30/111320.64

7/31/111292.28

8/31/111218.89

9/30/111131.42

10/31/111253.30

11/30/111246.96

12/31/111257.60

1/31/121312.41

2/29/121365.68

3/31/121408.47

4/30/121397.91

5/31/121310.33

6/30/121362.16

7/31/121379.32

8/31/121406.58

9/30/121440.67

10/31/121412.16

11/30/121416.18

12/31/121426.19

12/31/131848.36

11/29/131805.81

10/31/131756.54

9/30/131681.55

8/30/131632.97

7/31/131685.73

6/28/131606.28

5/31/131630.74

4/30/131597.57

3/28/131569.19

2/28/131514.68

1/31/131498.11

WHAT WE’VE SEEN AT T. ROWE PRICE

0%

5%

10%

15%

20%

25%

2012 2013

29% 26% 26%

30%

2014

Percent of Non-TDF Users Age 20–34 With Greater Than 80% of Their Account Balance Invested in Cash

Source: T. Rowe Price Retirement Plan Services 401(k) accounts that are currently active, have a positive balance, and do not include any assets invested in target date funds. Cash includes money market and stable value funds.


Build credibility with sponsors and drive better outcomes

− Promote an age-appropriate default investment for auto-enrollment

− Elevate the initial default savings rate

– Couple that with steeper auto-escalation increases

– Provide younger participants with the opportunity to delegate (or validate) retirement investment decisions

2,000 participants

200 plan sponsors

T. ROWE PRICE MILESTONE STUDY

#1 FINANCIAL GOAL BY AGE GROUP

Paying off debt

Saving for retirement

Just getting by Paying off debt

Saving for retirement

Just getting by

44%

19%

18%

35%

35%

10%

THINKING ABOUT RETIREMENT GOALS

Source: 2010 T. Rowe Price Milestone Study.

Employees start setting their goals in

their 30s/40s

I’m starting to think about my retirement goals in my 20s/30s

AWARENESS WITHOUT ABILITY CREATES FEAR, DENIAL, AND ANXIETY

How do I save for retirement? Need to pay

the bills

School loans

Creditors are calling

I’m worried

TOP 3 MILESTONES TO SAVE MORE FOR RETIREMENT


Reaching a certain age 20%

Health 21%

Current events/economy 27%

Ages 50–59

Becoming a parent 29%

Current events/economy 19%

Marriage 17%

Ages 20–29

PLAN CHANGES DON'T POSITIVELY IMPACT SAVINGS BEHAVIOR

1.2% 0% Typical Plan Changes

Investment changes Enhanced website Company match formula change New loan provisions Paperless statements


COMMUNICATION PREFERENCES


1:1 Consultation

49% 46%

Online Tools With Personalized

Recommendations

41%

34%

Educational Webinars

22% 19%

Electronic Communications

30% 33%

Print Communications

28%

18%

Ages 50–59 Ages 20–29


Build credibility with sponsors and drive better outcomes

− Promote communications and tools around holistic financial topics

– Recognize the need to connect with participants on an emotional and personal level

– Bundle retirement savings messages with key “milestone” events to maximize participant adoption

– Tap into the innate desire to compete, to achieve results: GAMIFY to engage.

WANT TO LEARN MORE?

Access our new advisor site: troweprice.com/millennials

Access our complete