Written by Stephen Ostrofsky, CFP®
The pursuit of personalized investment advice might seem elusive for many Florida Retirement System (FRS) Investment Plan participants. For many, the Self-Directed Brokerage Accounts (SDBAs), has gone unnoticed by PBSO deputy sheriffs and employees since 2014. In January 2014, the FRS announced the SDBA option for FRS Investment Plan investors to provide greater investment options, including fee-based investment advisory services.
While SDBAs provide greater investment choice, this might seem to compound the complexities of investing for retirement. However, with the assistance of a financial professional this greater investment flexibility can result in retirement planning outcomes which are more consistent with your investment objectives and risk tolerances. SDBAs provide investors with access to investment advisory services which provide continuous and ongoing investment management. This investment advisory relationship is known as a fiduciary relationship, which governs and mandates that financial advisors place their client’s “best interests” first.
The Self-Directed Brokerage Account option was established to provide pension plan participants with access to greater investment choices and a fiduciary relationship through investment advisory services. Employee Retirement Income Security Act of 1974 (ERISA) section 3(21) and 3(38), provides that when an individual pension plan participant hires an investment advisor, they are fiduciaries under ERISA section 3(21) and 3(38).
Employee Retirement Income Security Act of 1974 (ERISA) section 3(21) and 3(38), provides that a fiduciary is an advisor who provides investment advice for a fee with respect to any investments of a pension plan. A fiduciary duty is owed to each pension plan participant by the investment advisor under the ERISA rules, if they exercise any authority or control over the management of the pension plan assets in return for a management fee. As a fiduciary, the investment advisor is responsible to:
- Understand pension laws and plan provisions;
- Diversify assets based on specific risk/return profile of client;
- Prepare investment policy statement;
- Select money managers and document due diligence;
- Control and account for investment expenses;
- Monitor the activities of money managers; and
- Avoid conflicts of interest and prohibited transactions.
True North Financial Advisors represents investment advisors who act as ERISA 3(21) and 3(38) fiduciaries when managing participant retirement assets within a Self-Directed Brokerage Account – Brokerage Window. These investment advisory services are provided through FRS Investment Plan SDBAs administered through Alight Financial Solutions for plan participants.
Contact True North Financial Advisors at (855) FRS-PLAN, we can provide personalized investment advisory services to retirement plan investors, through Self-Directed Brokerage Accounts. Investment Policy Statements can help manage suitable Asset Allocations Models for your retirement plan accounts based on your risk tolerances and investment time horizon designed to reach your retirement goals and objectives.
