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September 10, 2013

The Long and Winding Road | Dalbar Certification

by The 401k Study Group ®

 A guest post by John Marion from Howard Capital Management

Contry Road

Howard Capital Management started on the journey to achieving Computer Model Certification 5 months ago.  We started down the road because we wanted an independent third party to review our methods for compliance with ERISA and we wanted the certification to show it.

There are very few companies that are approved by the Department of Labor to certify computer models under ERISA. DALBAR is one of the best know of these companies. So we chose DALBAR as the “gold standard” to conduct our certification.

Five months ago, we asked DALBAR to open the Optimizer’s hood and kick the tires. The certification process covers the following points, among others:

  • Clean background check
  • Investment theory is generally accepted
  • Performance and fees are reasonable
  • 5-year track record
  • No conflicts of interest

After 7 weeks of intense scrutiny, we received DALBAR’s certification on May 20th, 2013. Needless to say we are proud to have received this credential.

 Now we can say that the Optimizer has been evaluated by DALBAR to determine if it meets the requirements to be used as a Certified Computer Model as defined by the Employee Retirement Income Security Act of 1974, as amended [“ERISA”] Section 408(g) and Internal Revenue Code [“IRC”] Section 4975(d)(17). As a result, the HCM 401(k) Optimizer® computer model has been granted Certified Computer Model status by DALBAR. This is important, because ERISA plan fiduciaries who meet all other ERISA requirements and use a certified computer model will qualify for the fiduciary relief granted under ERISA Section 408(g).

There are very few companies offering models that have been certified and none that we know of that embrace the Advisor as the Optimizer does.This is very important because it allows us to partner with advisors to offer plan sponsors a solution that can grant them fiduciary relief.

Image Courtesy of nuttakit at Freedigitalphotos.net

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