401(k) Specialist Issue 1 - 2016 - 39

INVESTMENTS
highly disciplined investment process based
on four principles: transparency, efficiency,
liquidity, and objectivity.
Another portfolio manager available on
both ModelxChange system and Matrix's
ModelTool(k)it is 3D Asset Managers. 3D
Asset Managers offers both risk-based
portfolios and a unique approach to
managing target date portfolios and, has
partnered with Newfound Research to offer
the 3D/Newfound PrudentPath Target
Date Portfolio Series.
The strategic component of the Pru''Until
recently, technology for
offering separately managed
accounts in 401(k) plans, especially
smaller-sized, was inefficient
(to say the least)
''
Model Manager solution gives advisors the
ability to build and manage custom model
portfolios.
Prices vary; Mid Atlantic Trust charges
3.5 basis points for use of the ModelxChange.
The charge, along with the
advisor's fee, can actually be accrued and
calculated into the model's unitization fee
on a daily basis.
Advisors who wish to offer separately
managed accounts from third party professional
money managers have a wide variety
of options from which to choose. They
include a range of investment approaches
and styles, including both ETF and mutual
fund-based portfolios (or a combination
thereof), tactically managed risk-based and
age-based portfolios, and fully-invested
portfolios. There are generally no minimum
investment requirements, so they scale to
both small and large retirement plans, and
many are also available as the plan's qualified
default investment alternative (QDIA).
One example is 7th Harvest Investments.
It offers three risk-based portfolios,
including Conservative Harvest Builder
Strategy, Moderate Harvest Builder Strategy,
and Growth Harvest Builder Strategy. Each
portfolio has a different risk-return profile
built with ETFs. 7th Harvest follows a
dentPath portfolios maximizes equity
exposure in positive market conditions,
while the tactical component alters equity
exposure during down market conditions.
The composition of the defensive sleeve
is based on where each portfolio lies
along the glide path. Like most target date
investments, the glide path becomes more
conservative over time, but unlike most
target date investments, the glide path has
flexibility to increase or decrease equity
exposure along the way.
" While we offer and believe in the
risk based approach when an advisor has
the ability to sit down with a participant
one-on-one and walk them through a risk
profile process, this does not happen with
each and every participant in many employee
plans, " explains Steve McCoy, CEO
at 3D Asset Management. " As a result, we
wanted to offer a similar customized solution
that exists in large plans for participant
in smaller plans, who are ultimately
defaulted into the QDIA, or who do not
have their risk profile reassessed after their
enrollment. "
Advisors who wish to differentiate themselves
by offering model-based, separately
managed accounts to their 401(k) plan clients
can now do so efficiently and cost-effectively,
even for the smallest of 401(k)
plans. These solutions bring a tailored,
lower-cost approach to offering professionally
managed accounts to plan participants
than ever before.
John M. Humphrey is chief operating officer with
July Business Services.
ISSUE 1 2016 | 401kSpecialistmag.com 39
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401(k) Specialist Issue 1 - 2016

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