Creation of an Advisor Fiduciary Audit File
As the plan fiduciary, recordkeeper, and TPA should all maintain specific documen- tation that creates an audit file, so should our advisor partners as well. This intense emphasis is derived from national enforcement by the DOL through specific proj- ects such as the Fiduciary Service Provider Compensation Project. Goals of such projects are to investigate service providers such as investment advisors and evalu- ate their compliance. Put simply, this means the evaluation of services provided versus compensation paid!
This is why a properly structured audit file is critical. APG's role in this process is to provide an in-depth review of the advisor's service model. This process emulates a mock audit environment to give our advisor partners a first-hand experience as to the level of scrutiny, intensity, and the massive quantity of information to be provid- ed. The advisor list of questions ranges from investment and fiduciary governance to employee education services. This extensive list of items is specific and granu- lar covering such items as: the frequency and quantity of services provided upon conversion; documentation of RFP processes, discretion and recommendation of investments; monitoring of an Investment Policy Statement (IPS); review of Section 408(b)(2) disclosures; compensation structure especially under basis points; and employee enrollment and ongoing education campaigns. APG diligently reviews each component with our advisor partners to reveal if the proper documentation has been provided and whether the service demonstration may justify the com- pensation. This mock audit environment produces specific scores within these cat- egories to "stress test" the service model. After this thorough analysis, APG makes specific recommendations for the adjustments to be made. These recommendations and fine tuning may include revisions to advisor service agreements, guidance on best practices of proper documentation, and creation of specific service calendars. It is only after this level of due diligence is performed that our advisor partners can have true peace of mind!