Recent Projects

Expert Witness Cases

Recent expert witness cases have revolved around the role of the fiduciary in performing their responsibilities within a defined contribution plan. Our role has included the evaluation of whether the fiduciary properly considered and acted in the best interest of plan participants (plaintiff). Our evaluation considered defined contribution plan structure, investment selection, active management monitoring and replacement, fees paid, and conflicts of interest. Damages are computed under the assumption that plan participants were not optimally served by the fiduciary. This created an economically impactful loss of wealth accumulation due to what we refer to as fiduciary malpractice. Others might refer to these as Employee Retirement Income Security Act (ERISA) and prudent fiduciary cases.

Defined Contribution Projects

We are on record for recommending that defined contribution (DC) plan (DCP) fiduciaries monitor active management using a three-year performance window and replacing all underperforming active managers with passive alternatives immediately. Having passive funds representing each asset class enables more straightforward asset allocation targeting for participants and greatly reduces the fiduciary oversight burdens and costs. To evaluate this approach, we performed an analysis of comparing two universes of investments. One is a universe of all active funds and the other is a universe of active funds being replaced with passive alternatives in the month following a 3- or 5- year underperformance period. This is to simply examine whether plan participants and fiduciaries would be better served with a switch to passive rather than trying to replace active managers with other active managers. Most fiduciaries are ill prepared to be able to identify consistently outperforming active managers. They would better serve their constituents by using passive exposures to each asset class rather than play this losers game. Many fiduciaries indefinitely postpone the decision resulting in wealth loss to plan participants.

Investment Consulting

Recent work includes the development of multi-asset class portfolio construction solutions. We believe that a balance must be retained between the number of asset classes and the benefits of diversification. Many asset classes are highly correlated and offer little added benefits when included in a well-structured wealth solution. Practically, for those clients managing smaller account balances, the level of granularity at the asset class level can border on the economically insignificant. If a solution contains dozens of asset classes (many of which offer little diversification benefit) we believe we are merely adding transactional inefficiencies and exposure targets that are so small they tend to be meaningless. Generally, our asset exposures meet most conforming expectations without containing largely redundant asset classes. We feel that any kind of decoupling is better addressed tactically within an asset class exposure.

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