Design, support and investment flexibility make a better 401(k) plan.

Transcription

1 Focus: Retirement plan services PlanPremier - TPA Advisor summary Design, support and investment flexibility make a better 401(k) plan. PlanPremier-TPA is a flexible retirement plan solution designed to meet your clients plan needs and help you succeed on your own terms. Compensation Meet the service needs of your plans: compensation flexibility Customize your fee-based arrangements: share classes available with no 12b-1 fees Investments Create diversified menus more easily: open architecture with target-date conversion * Make it easier to invest wisely: target date funds with a dynamic approach to equities Support Support fiduciary needs: independent ERISA 3(21)/3(38) investment programs Help improve participant outcomes: on-site enrollment and education services Offer expanded menu of plan services: third-party administrator services Deliver valued services more effectively: resources, tools and access to service specialists, including a network of third-party administrators Pricing Know exactly what fees pay for: straightforward approach Show that price matters: flat-rate recordkeeping fees Win and keep more plans: automatic repricing * Assumes sponsor selects standard conversion method, with opt-out option, by mapping to the American Funds Target Date Retirement Series. If not, American Funds would serve as a core manager and additional solution requirements would apply. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. Multiple Perspectives. One Approach. SM For financial professionals, third-party administrators and institutional consultants only 1

2 Compensation Select a compensation plan to support your service level Each retirement plan requires a different level of service. To compensate you for what you do, American Funds offers flexible compensation schedules for diverse advisor service models. PlanPremier-TPA provides a level payout across all investments. This structure makes tracking your compensation easier and, if you help sponsors choose plan investments, can help protect you from any perception of bias or conflict of interest. Your annual compensation is included in the funds expense ratios; there are no additional investment-related fees. 65 bps 35 Compensation rates bps 20 bps PlanPremier-TPA Share class Advisor compensation Average expense ratio * R % 1.42% R R R-5 Paid separately; 0.47 R-6 set by fee-based advisor 0.40 * Average expense ratios shown are provided only as examples. The actual average expense ratio depends on the investments selected for the plan and participant allocations. Expense ratios reflect applicable fee waivers and expense reimbursements, without which expenses would be higher. The average expense ratio shown for each share class is for all funded investments and is weighted, based on assets in the program as of 12/31/2012. Accordingly, more weight is given to funds with more assets. The actual expense ratios, as reported in each fund s prospectus at the time of publication, range from 0.55% to 3.29% for R-2; 0.52% to 2.47% for R-3; 0.43% to 2.33% for R-4; 0.05% to 1.98% for R-5; and 0.05% to 1.97% for R-6. Although American Funds Money Market Fund class R-2, R-3 and R-4 shares have a 12b-1 plan, payments are currently being suspended in this low-interest-rate environment. Plus compensation and payment options for your fee-based practice Custom compensation Set your own compensation rate for the services you provide Choose investment classes with no 12b-1 fees Custom payment options Get paid through automatic advisory fee deductions from the plan or participant accounts 2

3 Investments Investment flexibility and choice to help build a diversified plan menu PlanPremier-TPA is an open architecture 1 solution (with standard target date conversion) that offers investments from American Funds, including our American Funds Target Date Retirement Series and a large collection of other well-regarded managers. Few, if any, other target-date series have as many highly regarded underlying holdings. Morningstar Target-Date Fund Series Report, 6/30/2012 American Funds Target Date Retirement Series different by design Objective-based, designed for investor success. The goal of our Series is to achieve an appropriate level of three critical objectives investors have throughout their lifetime: growth, income and conservation of capital. A dynamic approach to equities. Our approach enables us to maintain a higher equity allocation (seeking to improve results), while increasingly emphasizing dividendproducing equities (seeking to reduce risk) over time. The highest manager retention rate in the industry. The average tenure of managers of the underlying American Funds is more than twice that of the target-date industry average. 2 Among the most competitively priced, actively managed target date funds. Our target date funds have lower expenses than the Morningstar institutional peer group averages. 3 Although target date funds are managed for investors on a projected retirement date time frame, the funds allocation approach does not guarantee that investors retirement goals will be met. American Funds investment professionals actively manage each target date fund s portfolio, moving it from a more growth-oriented approach to a more incomeoriented focus as the fund gets closer to its target date. The target date is the year in which an investor is assumed to retire and begin taking withdrawals. Our investment professionals continue to manage each fund for 30 years after it reaches its target date. 1 Assumes the client selects standard conversion method, with opt-out option, by mapping to the American Funds Target Date Retirement Series. If not, American Funds would serve as a core manager, and additional solution requirements would apply. 2 Source: Morningstar, 5/2012, based on investment prospectuses as of 12/31/ Source: Morningstar, as of 3/31/2013, for target date funds. 3

4 Support Resources, tools and services to help your plans run more smoothly We offer support services and, along with the plan s third-party administrator, take on much of the heavy lifting for the plan. We provide everything from educational literature to online support so you can focus your time on servicing the plan s other important needs. Our support model includes: Fiduciary services independent, flexible, affordable and optional American Funds makes available investment-related fiduciary services through Wilshire Associates Incorporated. Flat-rate cost based on participants, not assets Service delivered by an independent fiduciary Flexible program features Plan participants ERISA 3(21) Nondiscretionary investment advisor ERISA 3(38) Discretionary investment manager 1 25 $ 300 $ , , ,250 1,001+ 1,000 2,000 Personalized sales and service Prospecting and selling strategies In-person assistance with finalist presentations Targeted and powerful proposals Information you need about our retirement plan solutions Responsive and reliable ongoing plan service, including investment and plan reviews Business-building resources Personalized value propositions A variety of share classes and compensation rates Customized plan proposals Help with designing plan investment lineups Hypothetical examples to address client concerns and encourage clients to focus on the long term Support with plan reviews and reports On-site and Web participant services On-site assistance to educate participants and guide them through enrollment A comprehensive system of online, electronic and print literature to help encourage employees to enroll in the plan, invest more wisely and make sound decisions when leaving the plan 4

5 Pricing Plan pricing to help you win and keep more business Straightforward pricing. Your clients will know exactly how much they re paying and what they re paying for. Flat-rate fees. Recordkeeping fees are based on the number of participants not plan assets. This means recordkeeping cost won t increase as plan assets grow. Automatic repricing as assets grow. PlanPremier-TPA generates a plan credit that offsets plan expenses, as illustrated below. Gross recordkeeping fees (standard ongoing fees, not including setup or TPA fees) Number of participants with account balances Base fee Per participant 1 25 $2,200 + $ , , ,000 6, More than 1,000 8, % 1 This illustration shows net plan cost (as a % of plan assets) for a hypothetical PlanPremier-TPA plan (R-3 share, 30 participants; $2.5 million in transfer assets). Net plan cost considers investment expenses and plan-level recordkeeping fees/credits. The average expense ratio shown is for all funded investments and is weighted, based on assets in the program as of 12/31/2012. Accordingly, more weight is given to funds with more assets. The actual expense ratio, as reported in each fund s prospectus at the time of publication, ranges from 0.52% to 2.47% for R-3. Although American Funds Money Market Fund class R-3 shares have a 12b-1 plan, payments are currently being suspended in this low-interestrate environment. Expense ratios reflect applicable fee waivers and expense reimbursements, without which expenses would be higher. A plan s actual expense ratio depends on the investments selected for the plan and participant allocations. Net plan expenses as % of plan assets Hypothetical example of PlanPremier-TPA annual pricing 30 participants $2.5 million in plan assets Share class Gross annual recordkeeping fee The American Funds difference: As assets rise, net plan cost falls 1 $2,500,000 $3,500,000 $4,500,000 $5,500,000 Plan assets Annual credit 2 Amount / Rate = Net recordkeeping fee (credit) R-2 $4,000 $11,250 / 0.45% $(7,250) R-3 4,000 8,750 / 0.35 (4,750) R-4 4,000 3,750 / R-5 4,000 1,250 / ,750 R-6 4,000 0 / ,000 2 Credits are based on plan assets and applied quarterly. 5

6 American Funds Retirement Plan Services Since our founding in 1931, American Funds has been committed to two enduring principles: Invest for the long term Respect the value advisors deliver to their clients In a survey of advisors, American Funds was first among 37 major retirement plan providers for being easiest to do business with and best-in-class advisor service and support. Cogent Research Retirement Plan Advisor Trends TM, 2012 This approach helps us position advisors for success and has made us a leader in the advisor-sold retirement plan market. Today, more than 360,000 small- to mid-size businesses and their employees rely on American Funds Retirement Plan Services.* Service and support to make your job easier Our service teams and programs help advisors and sponsors manage their plans easily and effectively. Among those key services are online and on-site education support to encourage enrollment and sound investing, and access to an independent third-party fiduciary service for a low flat fee and without adding to your own liability to help sponsors select and monitor plan investment lineups. * Includes 401(k), profitsharing, money purchase, SEP and SIMPLE plans, as of 12/31/2012. Flexible solutions to serve you and your clients Our retirement plan solutions, designed to support small- to mid-size plans, offer your clients a wide choice of investments from wellknown fund families. The solutions also offer flexible advisor compensation to support your commission- or feebased service models. For information, assistance or to order a proposal, visit us online at americanfunds.com/401k or call (800) , ext. 3. Value and clarity to build better plans We strive to keep our fees competitive but without sacrificing quality, and we endeavor to make it easy to understand the expenses associated with retirement plans. Such clarity is necessary to enable sponsors and investors to make informed investment decisions. Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing. Lit. No. RPPTFL P Litho in USA CGD/L/10270-S American Funds Distributors, Inc. Printed on recycled paper American Funds from Capital Group For financial professionals, third-party administrators and institutional consultants only