Vantage Advisors, LLC Disclosures under ERISA Section 408(b) (2) for 401K Retirement Plans
General Purpose of This Disclosure
Retirement plans are subject to rules, regulations and oversight by the United States Department of Labor under the ERISA (Employee Retirement Income Security Act) guidelines. ERISA is a federal law that establishes minimum standards for pension plans in private industry. ERISA was enacted to protect the interests of employee benefit plan participants and their beneficiaries by:
- Requiring the disclosure of financial and other information concerning the plan to beneficiaries
- Establishing standards of conduct for plan fiduciaries
- Providing for appropriate remedies
On February 3, 2012, the Department of Labor finalized the fee disclosure regulations under ERISA Section 408(b)(2). This regulation requires service providers to retirement plans to make written disclosures related to the following:
- Fiduciary and/or RIA status
- Services offered
- Total, direct and indirect, compensation received
The belief and hope is that by requiring these disclosures, plan sponsors and its’ Trustees can make the well-informed determination that the current 401(k) plan is a reasonable contract; determine the reasonableness of the compensation paid for services; and the conflicts of interest that may affect a service provider’s performance of the services they offer.
Under ERISA section 404(a)(1) a plan sponsor is to “act prudently and solely in the interest of the plan’s participants and beneficiaries and for the exclusive purpose of providing benefits and defraying reasonable expenses of administering the plan” (Fed Reg/Vol.77, No. 23). The new disclosure law is written for the express purpose of easing the burden of the Plan Sponsor by requiring service providers to be very specific about all services provided to the Plan and all fees and costs related to the Plan as well as disclose the fiduciary status of those providing service to the Plan to the plan sponsor and its Trustee(s).
Fiduciary and Registered Investment Advisor Status
Vantage Advisors is a Registered Investment Advisory firm based in St. George, Utah. We are organized as a limited liability company under the laws of the State of Utah. Vantage Advisors, LLC is currently registered with the State of Utah Securities Division and the Nevada Secretary of State, Securities Division. We have been providing investment advisory services since 2010. Gregory A. Kemp and Neal Marchant are our principal owners.
Vantage is the plan fiduciary and offers non-discretionary investment advice which is personalized for the 401K plan. As such, the company has a fiduciary obligation to the Sponsor and Trustee of the Plan. A fiduciary is one who acts for and on behalf of another which gives rise to a relationship of trust and confidence. A fiduciary is to act in good faith and at all times for the sole benefit and interest of those who put their trust in them.
Investment Advisory Services
Vantage Advisors represents that it is not subject to any disqualification as set forth in Section 411 of ERISA. In performing Fiduciary Services, it is acting as a fiduciary of the Plan as defined in Section 3(21) under the Employee Retirement Income Security Act ("ERISA") for purposes of providing non-discretionary investment advice to the plan and its’ participants. The services are designed to assist plan sponsors in meeting their management and fiduciary obligations to Participants under the Employee Retirement Income Securities Act (ERISA).
As part of our investment advisory services, and after gathering information about your financial situation and objectives, we recommended that you use the services of either John Hancock Retirement Plan Services (John Hancock) or SEI Private Trust Company (SEI), third party asset managers ("TPAM"), to manage your participant’s entire investment portfolio and Raymond Reeves and Stout for Plan administration. Factors that we took into consideration when making our recommendation(s) included, but were not limited to, the following: their performance, methods of analysis, fees, your financial needs, investment goals, risk tolerance, and investment objectives. The third party asset managers actively manage your portfolio and assume discretionary investment authority over your account. We will periodically monitor this TPAM(s)' performance to ensure its management and investment style remains aligned with your investment goals and objectives.
You may terminate your investment advisory service agreement with our firm upon 30-days' written notice to our firm. You will incur a pro rata charge for services rendered prior to the termination of the portfolio management agreement, which means you will incur advisory fees only in proportion to the number of days in the month for which you are a client. Refunds are not applicable since our advisory fees are paid in arrears. You will sign an agreement directly with the recommended TPAM. You may terminate your advisory relationship with the TPAM according to the terms of your agreement with them. You should review their brochure or website for specific information on how you may terminate your advisory relationship with the TPAM and how you may receive a refund, if applicable. You may contact the TPAM directly for questions regarding your advisory agreement with the TPAM or have us contact them on your behalf.
As paying agent for our firm, your independent custodian will directly debit your accounts for the payment of our advisory fees. This ability to deduct our advisory fees from your accounts causes our firm to exercise limited custody over your funds or securities. We do not have physical custody of any of your funds and/or securities. Your funds and securities will be held with a bank, broker-dealer, or other independent, qualified custodian. You will receive account statements from the independent, qualified custodian(s) holding your funds and securities at least quarterly. The account statements from your custodian(s) will indicate the amount of our advisory fees deducted from your account(s) each billing period. You should carefully review account statements for accuracy. If you have a question regarding your account statement, or if you did not receive a statement from your custodian, please contact us directly at the telephone number on the cover page of this brochure.
We will not vote proxies on behalf of your advisory accounts. At your request, we may offer you advice regarding corporate actions and the exercise of your proxy voting rights. If you own shares of common stock or mutual funds, you are responsible for exercising your right to vote as a shareholder. In most cases, you will receive proxy materials directly from the account custodian. However, in the event we were to receive any written or electronic proxy materials, we would forward them directly to you by mail, unless you have authorized our firm to contact you by electronic mail, in which case, we would forward any electronic solicitation to vote proxies.
Total Direct and Indirect Compensation to Vantage by the Plan or its Participants
Our fee to the Plan is a flat fee based on a percentage of assets under management. The fees are paid monthly and are paid in arrears based on the value of your participant’s accounts on the last day of the month. The fee Vantage charges plan participants is 1% of plan assets. The third party asset manager deducts our fee directly from your participant’s accounts as the qualified custodian holding your funds and securities. They are able to deduct our advisory fee only because you have given them written authorization permitting the fees to be paid directly from your participant’s accounts. Further, the third party asset manager delivers an account statement to the plan and its participants at least quarterly. These account statements will show all disbursements from the account. You should review all statements for accuracy.
We do not accept performance-based fees or participate in side-by-side management. Side-by-side management refers to the practice of managing accounts that are charged performance-based fees while at the same time managing accounts that are not charged performance-based fees. Performance-based fees are fees that are based on a share of capital gains or capital appreciation of a client's account. Our fees are calculated as described in section above, and are not charged on the basis of a share of capital gains upon, or capital appreciation of the funds in your participant’s accounts.
John Hancock, SEI and Raymond Reeves and Stout (the Third Party Administrators of your plan) have fees that are separate from our advisor fee. Though we recommend that you use third party asset managers ("TPAMs") based on your needs and suitability, we do not receive compensation from the TPAMs for recommending that you use their services. Advisory fees charged by TPAMs are separate and apart from our advisory fees. You are not obligated, contractually or otherwise, to use the services of any TPAM we recommend.
Participation or Interest in Client Transactions
Neither our firm nor any of our Associated Persons has any material financial interest in client transactions beyond the provision of investment advisory services as disclosed in our firm’s ADV Part 2A brochure.