PLAN DESIGN

BUNDLED/UNBUNDLED APPROACH TO PLAN CONSULTING

As a full service actuarial, administrative and benefit consulting firm we may be unique in that we actively promote what has come to be called the Abundled/unbundled approach to administration of qualified plans.

Corporate sponsors of qualified plans have many decisions to make when installing a new plan or changing administrators of an existing plan. Perhaps one of the most important is whether to separate the functions of plan design and administration from those of the investment of trust assets. In other words, should you use an independent third party administrator or should these responsibilities best be trusted to a company whose primary responsibility is that of an investment advisor?

Traditionally, there have been two approaches that companies have offered to clients when servicing pension plans--bundled and unbundled. The full services approach, in which one company offers all services such as investments, plan design and consulting, plan document service and plan administration--is commonly called the bundled approach. This approach has a lot of appeal to companies unfamiliar with qualified plans and have been told that they can save time and money by having all services bundled together and handled by one company. Many companies, such as Nations Bank, SunTrust, The Principal Group and brokerages such as Merrill Lynch and Raymond James promote this bundled approach.

The disadvantage is that all of these services require expertise, and it’s virtually impossible for one company to provide excellent service in all areas. Some services provided are better than others. Some services provided are better than others. Therefore, it may depend on where your priorities lie and where you can afford to make sacrifices.

The unbundled approach on the other hand is used by companies offering only one service (i.e. investments), leaving the client to go out and find reputable companies to provide the other services. The client may ultimately end up dealing with three or four different companies and contracts. Who is to objectively advise him of the best qualified or most reputable company for each of the services to his plan?

HCH Companies believes in a combination of the best of both approaches or the so-called bundled/unbundled approach. That is we provide the plan design, documentation and administration services, with the optional service of plan investments through arrangements with a combination of nationally known experts. You deal with one company--HCH Companies--which
coordinates all of the services needed for your plan.

As a third party administrator, we specialize in the design, documentation and administration of qualified plans.

Customized proposals, reports, projections, valuations, plan amendments and participant statements are a significant part of our business. Such individualized administration would be impossible for a large investment company or bank, whose primary responsibility and objective is the investment of plan assets. For such a company, plan administration must be and is, an incidental service provided to clients as a means of attracting additional assets for management.

On the other hand, we are in the best position to offer the client our recommendations as to the best investment companies who are currently offering the products ideally suited for the qualified plan market. Which company has a combination of the best performing investments? Who can
provide daily valuations to your employees?

Does it value its funds on a daily basis? Can it download its asset information onto our administration software so that we can offer administration on a more timely basis with less room for error? Does it offer a benefit sensitivity for the benefit of your employees? In other words, does it allow for the withdrawal of funds by employees without charge for death, disability, retirement for termination of employment? And finally, does it restrict its offering of funds to only in-house products or has it imported many of the best performing national and global mutual funds into its portfolio for your employees? Does it provide the variety necessary to assure compliance with corporate investment goals as they relate to its qualified plan? These and many other questions are important when making a decision as to the plan’s investment advisor.