ADDENDUM #2 RP Provide Defined Benefit and Defined Contribution Retirement Plan Services

Transcription

1 December 07, 2017 ADDENDUM #2 RP Provide Defined Benefit and Defined Contribution Retirement Plan Services The proposal deadline has been changed to December 21, Questions: Q1. What is the reason the county has issued the RFP? A1. Best Practice. Due diligence. In an effort to make sure we are providing the best benefits to our participants. Q2. Who are the incumbent providers for the Defined Benefit plan? The Defined Contribution Plan? A2. Empower Retirement Q3. On the DB side, is there an opportunity to propose any different investment strategies or is it just record keeping only? A3. Record keeping only. We have investment advisors for the DB plan. Q4. Are you looking for more of an unbundled DB solution without the actuaries? A4. Yes. Q5. Is the current vendor doing both DB and DC administration? A5. Yes. Q6. The RFP requests a dedicated on-site person. Can you elaborate more on what you expect of this person? A6. On-site full time, Monday through Friday, 8am until 5pm. This person is expected to have one-on-one meetings with participants to go over retirements planning, lunch-and-learns, education training, new hire orientation, etc. This person will be expected to go to different County locations to meeting with participants in groups. Q7. How many different locations do you have? A7. Approximately 50. Q8. Why the decision to have the vendor have that person instead of Gwinnett County providing that person? A8. It would not be a good practice for the County to provide the person. A company employee will have the credentials someone will be expected to have to be a person to give guidance. A company employee is going to have more knowledge and experience. Q9. What is the time frame of the one-on-one meetings? A9. 20 to 30 minutes on average. Q10. Does the current on-site person support both DB and DC plans? A10. Primarily DC but can take into consideration the DB plan.

2 RP Addendum 2 Page 2 Q11. If two providers are awarded (one for DB and one for DC), are both expected to provide a full time onsite person? A11. No. We are requesting a full time DC educating person who is knowledgeable of the DB side. Q12. Based on the number of County employees and locations, is one on-site person enough? A12. If you propose more than one, we will take that into consideration. Q13. What is the anticipated go live date once the contract is awarded? A13. DB and DC may not transition at the same time, but both are anticipated to go live before the end of Q14. Regarding annuity contracts, how many participants have converted to the payment phase? A14. None to date. Q15. What is the percent of assets in the managed accounts for the DC plan? A15. As of 9/30/17 the managed account assets are: 401(a) $74,282,165.79; 457(b) $31,607, Q16. Are there any services you are not currently getting from your provider that are induced in this scope of services that you desire? A16. No, but we will take into consideration any added services you propose. Q17. Are you getting a custom website now? A17. Yes. We are currently maintaining a website with a single sign-on to view both DB and DC. Q18. On the DC side, do you currently have voice response if a person calls in? A18. Yes. Q19. Is the work force technology savvy? A19. We have a very diverse work force. The on-site person provides a lot of support for those who need it. Q20. Gwinnett County may lose the ability to have a single sign on if this is awarded to two providers. Is this seen as an impediment? A20. No. Q21. Do you have a date for finalist interviews? A21. Likely January or February, but this is subject to change. Q22. To confirm for the DC plan, you only want the proposal for the stable value fund? A22. Yes. Q23. Did you indicate that on the DC side the annuity options are sparse? A23. We have very few we have to maintain. These are from a previous plan that was offered. Q24. Can you please confirm the total number of unique participants with DC accounts? There are currently 10,954 total between the 401(a) and 457(b); 401(a) has 4,811 participants, the 457(b) has 6,143 participants. Individuals with both accounts would only be counted as a single participant. A24. 6,639 QUESTIONS ARE REGARDING THE DC PLAN Q25. What Managed Account product is currently being used? A25. Empower uses Morningstar as their independent investment advisor. Attached is the disclosure brochure.

3 RP Addendum 2 Page 3 Q26. What is the breakdown of active and inactive (terminated with a balance) participants in each plan? A26. Active Terminated 401a 3,484 1, h ,123 1,646 Q27. What is the total number of unique participants in both plans? A27. 6,639 Q28. What is the number of employees eligible to participate in each plan? A28. Approx. 3,283 in the 401(a) plan Q29. What is the amount of assets on loan (in each plan) and how many loans does this represent? A loans with outstanding balance of $2,400,972 Q30. What is the number of open self-directed brokerage accounts? A a h Q31. What is the number and frequency of payroll (ie: 1 biweekly payroll)? A31. Biweekly and monthly. Q32. Please confirm all assets (including the stable product) are fully liquid? If not, what is the exit provision or market value adjustment? A32. The Gwinnett Stable Value Fund is 100 percent liquid. For the participant, there is never a market value adjustment, contingent surrender charge, deferred sales charge, or surrender charge for withdrawals from the plan or transfers to other investments within the plan. Employer-directed transfers, including contract termination, are conducted either in-kind to a new provider (with no penalty), or the assets in the Gwinnett Stable Value Fund may be sold at the current market value. There are no market value adjustments or penalties or fees of any kind. Q33. Is there any access to the Great West Secure Foundation Balanced Fund? Are participants locked into this fund? A33. Yes. Participants can withdraw without penalty. However, participants would lose the ability to annuitize and have paid an additional fee for something they will no longer have. Q34. Regarding the structure of the Gwinnett Stable Value Fund: If the stable value product is a Synthetic or Separate Account product: o What is the Market/Book ratio? o What is the current crediting rate? o What are the exit provisions? o Who are the providers of the book value guarantee? o Who manages the underlying assets? o What is the current underlying duration and average credit quality? o What is the benchmark for the underlying manager? If the stable value product General Account product: o What are the exit provisions? Are there multiple options for the plan sponsor to select? o If there is a lock up period, can the fund be blended? o What is the current declared rate? o Is there a minimum crediting rate offered?

4 RP Addendum 2 Page 4 A34. If the stable value product is a Synthetic or Separate Account product; The Gwinnett Stable Value Fund is a Separate Account product What is the Market/Book ratio? As of September 30, 2017 the market/book ratio was 99.9%. What is the current crediting rate? The net credited rate for the 4th quarter 2017 is 1.90%. What are the exit provisions? Employer-directed transfers, including contract termination, are conducted either in-kind to a new provider (with no penalty), or the assets in the Gwinnett Stable Value Fund may be sold at the current market value. There are no market value adjustments or penalties or fees of any kind. Who are the providers of the book value guarantee? The book guarantee wrap provider is Great-West Life & Annuity and they wrap 100% of the Gwinnett Stable Value Fund. Who manages the underlying assets? The portfolio is managed by Great-West Capital Management. What is the current underlying duration and average credit quality? As of September 30, 2017 the duration of the portfolio was 3.2 years and the average credit quality was AA+ (Moody s). What is the benchmark for the underlying manager? Per the Gwinnett Stable Value Fund IPS, the credited rate benchmark is: The interest rates provided to participants after investment management fees will be compared to the yield of three-year treasury notes, on a constant maturity basis. If the stable value product General Account product: N/A. The Gwinnett Stable Value Fund is a Separate Account product What are the exit provisions? Are there multiple options for the plan sponsor to select? N/A If there is a lock up period, can the fund be blended? N/A What is the current declared rate? N/A Is there a minimum crediting rate offered? N/A Q35. Does the plan currently utilize e-delivery? If so, what percentage of participants signed up to receive communications via e-delivery? A a: 98% 401h: 91% 457: 98% Q36. Regarding the Life Insurance Policies: How are the life insurance policies registered plan/trustee as owner? What is the frequency of the premium payments (ie bi-weekly, annual, etc )? What contributions source(s) is used to pay premiums? Are premiums fixed or variable? What is being reported to the participant and how often (ie just premiums paid and cash value, face value, beneficiary, carrier information, etc ) A36. All Empower is currently doing is deducting the premiums from participants accounts. The policy is owned by the participants. Q37. Page 6 of the RPO24-17 INV.PDF, Implementation Services under Section B states there are 3 DC plans and the 401(h). Please confirm there are only the 401(a) and 457(b) DC plans. A37. The DC Plan consists of three plans, 401(a), 457(b) and 401(h). Q38. Please provide tickers and/or CUSIPS for the current fund lineup. A38. Please assume all funds are in the cheapest share class and no revenue share.

5 RP Addendum 2 Page 5 QUESTIONS ARE REGARDING 401(h) Q39. What services are being sought for this plan (overall administration of the plan or simply holding assets and cutting checks from the plan)? A39. Full administration of the plan is required. Upon retirement, retirees who have a 401(h) plan receive a welcome packet of how to process claims for reimbursement from their account. All correspondence, approvals, denials and document verifications are administered by the third party vendor. Q40. What services are required for the participant experience? A40. Full administration of the plan is required. Upon retirement, retirees who have a 401(h) plan receive a welcome packet of how to process claims for reimbursement from their account. All correspondence, approvals, denials and document verifications are administered by the third party vendor Q41. If full administration is needed, are you open to a vendor bidding with a 3rd party to handle the administration work? A41. Full administration is required. Yes, the services are outsourced by current incumbent. QUESTIONS ARE REGARDING THE DB PLAN Q42. Please provide total assets for both the main plan and the smaller 6 participant plan. A42. There is only one plan. Total assets are $1,119,495,944. Q43. Please provide the actuarial valuations for both DB plans. A43 There is only one DB plan. See attached actuarial valuation report. Q44. Rows talk about an outside actuary. Can/should we include actuarial services in our responses? A44. No. Q45. Rows of the spreadsheet talks about gathering historical data and data cleanup. Are there any known issues with the data? Is all participant data housed in electronic format? If not, what percentage of data is held in paper files? A45. Data is electronic and in good shape with very recent review. Q46. Do participants currently have access to an online benefit estimate tool? If so, what percentage of the population runs automated (do not require any back office manual intervention)? A46. Yes. We don t have the percentage but most of our active participants access the online benefit calculator or our offices access it for them. Most of the manual request will come from us for special circumstances and that volume is not very high. Q47. Can you provide additional detail regarding the 401(h) plan; total assets, number of participants, etc.? A47. Assets: $6,886, Participants: 549 Contributions: $107, Distributions: $84, Q48. Will the County consider a DC bid for the 401(a) and 457(b) plans only, or are all three plans (401(h) Retiree Medical Savings Plan included) a requirement for consideration? A48. No. All 3 plans are a requirement. Q49. Will the County accept a bid for DB administration services only? A49. Yes

6 RP Addendum 2 Page 6 Q50. Is the DB service provider expected to issue benefit payment checks and direct deposits or communicate payment instructions to a third party? A50. The DB service provider will be responsible for the issue of benefit payment checks and direct deposits either internally or through third party. Q51. Who is the current check writer/payer? A51. As of 1/1/18, Northern Trust is the check writer/payer. Q52. RFP includes information about a Rabbi Trust plan for executive-level employees. What services are expected to be provided for the Rabbi Trust for the DB service provider? A52. Determining if participants benefits exceed the qualified plan limits and if so how much will need to be paid from the Rabbi Trust/non-qualified plan; completing annual calculations to be paid out of the plan; issuing appropriate tax documents; issuing payments. Q53. Activity statistics were provided for the DC and 457 plans. Can you also provide statistics for the DB plan such as: number of retirements, number of terminations, estimate requests (not on internet), Pensioner death with beneficiary, Pensioner death without beneficiary, number of participant calls for DB related issues, etc. A53. Retired, disabled participants and beneficiaries currently receiving benefits 2,200 Terminated participants and beneficiaries entitled tobut not yet receiving benefits 833 Active participants 1,425 Total 4,458 In reference to the Pensioner with or without beneficiary, the Plan documents dictate the beneficiary for pre-retired participants who have not named a beneficiary, which is spouse, if none, children, if none, parents, if none, estate. Participants upon commencement of benefits either select single life annuity (which requires no beneficiary) or a joint and survivor benefit, which requires the participant to name an irrevocable beneficiary. Benefits will not commence without a designated beneficiary in this case. The County receives the majority of calls related to the DB Plan. Q54. What is the distribution of headcounts between benefit Schedules A, B and C. A54. There is one Defined Benefit plan with several structures with a total of 4,458 participants. See answer to question 53 for breakdown. Q55. How much on-site participation is expected (i.e., daily or office on-site, monthly, quarterly, etc.) for the DB plan? A55. None. Q56. What role, if any, will the County s staff play in the retirement process? A56. The County is quite involved. County staff counsel and educate employees, distribute and collect retirement packages, qualify service credit and retirement eligibility, and submit packages to vendor to calculate the benefits and issue payments. Q57. Our standard consulting agreement s terms and conditions include some limitation on liability for mere negligence or from consequential damages. a. Is the County open to accepting mutually-agreeable contract terms, which include some limitation of liability on the work performed by the contracting firm? b. Also, are there any statutory requirements regarding limitation of liability of which we should be aware? A57. The sample Gwinnett County Annual Service Provider Contract is included in the original proposal. Any exceptions must be stated in detail and submitted as part of your proposal document. Vendors may provide their own contract for review. All terms and conditions may be reviewed and negotiated by Gwinnett County and taken into consideration.

7 RP Addendum 2 Page 7 Q58. How much is the County paying for DB administrative services currently? A58. In 2016 the County paid $818,000 in DB administrative costs. Less than half of that was paid to the incumbent. However, proposers should submit a proposal with costs that are believed to be fair and appropriate. Q59. What is the County s budget for the requested DB plan scope of services? A59. The budget is not set. Q60. Are census files provided by employers to current record keepers with participant data? A60. Yes. Q61. Please provide the total value of assets in the incumbent s managed accounts solution. A61. As of 9/30/17, the managed account assets are: 401(a) $74,282,165.79; 457(b) $31,607, Q62. Please provide the fee structure in place with the current provider. A62. DC participants are charged $52/year, deducted from the participant account quarterly. Q63. What are the current market-to-book ratios for the stable value funds offered in the Plans? A % Q64. Are any additional staff provided by the incumbent at the office located provided by the County? A64. The incumbent provides one dedicated, full-time, onsite representative who is located in a local office provided by the County. Q65. Is the County satisfied with the current levels of service provided by the incumbent? A65. Yes. Q66. Please provide the number of unique participants between the 457 and 401(a) plans. A66. 6,639 Q67. Please provide the expectations with respect to the requirements for recordkeeping the existing life insurance policies. A67. The policies are owned by the participants. The current recordkeeper only deducts the premiums from the participants accounts. Q68. In the excel file labeled IV. Stable Value Fund Management, the request is to complete the following charts for the product as of June 3rd, Please confirm June 3rd, 2017 is the intended date, and not June 30th, A68. June 30 th is the intended date. June 3 rd was a typo. Q69. Can you share the most recent actuarial report? A69. Yes. See attached. Q70. Can you provide additional details on the Gwinnett SV Fund general/separate account product, current crediting rate, etc? A70. See A34. Q71. What are the total assets in the managed account program? A71. The 401(a) plan has 2,886 participants with $74,282, in assets. The 457(b) plan has 2,903 participants with $31,607,

8 RP Addendum 2 Page 8 Q72. Is the cost of managed accounts included in the recordkeeping fee? If not, what is the fee schedule? What are the total fees paid for managed accounts? A72. No Participant Account Balance Quarterly Fee Annual Fee < $100, % 0.45% Next $150, % 0.35% Next $150, % 0.25% > $400, % 0.15% Fees paid for all three plans 2014: $220, : $263, : $305, Q73. The County s financial report indicates a total spend of $818,000 in 2016 on administrative costs for the DB plan. What percentage of that was for administrative services performed by Empower? A73. Less than half of the administrative costs referenced above were paid to Empower Retirement for the DB Plan. However, proposers should submit a proposal with costs that are believed to be fair and appropriate. Q74. How are the life insurance contracts administered? A74. The life insurance policies are owned and maintained by the participants. The record keeper deducts the premiums from participants accounts. Q75. How is the frozen retirement income product currently being administered? A75. Empower Retirement is charged with administering the payment of the annuity upon retirement of the participant. Q76. Could the County elaborate on their current fee structure with Empower on the Defined Benefit & Defined Contribution Plans? Is the cost at 100% for the full time Education Representative incorporated into Empowers pricing structure for the County? If so, is the cost allocated across both the Defined Benefit Plan and the Defined Contribution Plans or just the Defined Contribution Plans? A76. See A73. The cost for the representative is included in our fee structure and the cost is only associated with the DC Plan. Q77. The County currently offers a managed account program today? If so, how many participants are in the program and what is the total amount of assets invested in the program? If not, are you open to continuing to offer considering managed accounts? A77. The 401(a) plan has 2,886 participants with $74,282, in assets. The 457(b) plan has 2,903 participants with $31,607, We are open to considering continuing a managed account-type program. Q78. Can you provide the number of loans and the balance in loans that are outstanding? A loans with outstanding balance of $2,400,972 Q79. Are participant contributions remitted in percentage or flat dollar or both? A79. Both Q80. Who is the County s payroll provider and how many payroll locations will be remitting payroll contribution data? A80. The County process payroll internally. Files will come from one location. (There is one each biweekly period and one monthly file.)

9 RP Addendum 2 Page 9 Q81. How many locations does the County have that require employee education services? A81. The County has approximately 20 departments and agencies with various locations spread throughout the County. Q82. What was the total number of QDROs processed in 2016? A82. Gwinnett County retirement plans do not recognize QDROs. Q83. Please provide plan details on the total number of unique participants with an account balances across all plans? ex. if a participant is in both the 401(a) and the 457(b) plan, that participant would count as 1 towards the total unique participants. A83. 6,639 Q84. Please confirm the number of eligible employees for each plan, number of participant accounts with balances, terminated and retired by plan provider? A84. Active Terminated 401a 3,484 1, h ,123 1,646 Q85. What is the anticipated plan implementation date if the County were to transition to a new provider? A85. Desired transition to be completed by the end of Q86. Concerning the 401(h) plan, is the County open to the services for this plan being outsourced to a 3rd party service provider that focuses specifically on healthcare benefit plans in order to provide your employees the best experience? A86. Yes. They are currently outsourced by current incumbent. Q87. Is the 401(h) considered a sub-plan to the 401(a) Money Purchase plan or the frozen Defined Benefit Plan? A87. A sub-plan of the 401(a) plan. Q88. What services specifically are being requested for the frozen Great-West SecureFoundation Balanced Fund product? A88. This should be prepared to administer and annuitize the product for the effective participants. Q89. What is the Stable Value funds market/book ratio? A % Q90. Please provide a minimum of three years of the Stable Value fund cash flow history, including contributions, withdrawals, transfers in and transfers out? A90. Please see attached Stable Value Cash Flow report. Q91. Please provide the asset demographic data for the Stable Value fund broken down by ages (10 year increments, if possible) as well as by active versus inactive (terminated/retired employees)? A91. Please see attached Stable Value Asset Demographics report. Q92. Can you please provide the Stable Value funds year-end balance for the last 4 years? A a $39,969, $36,020, $34,354, $33,676, h $3,491, $3,369, $3,390, $3,243, $44,842, $42,313, $41,437, $43,693, Q93. Regarding single sign-on capabilities, are you referring to the Voya portal or Gwinnett s portal? A93. Web portal access is provided by the vendor.

10 RP Addendum 2 Page 10 Q94. What are the fund provisions for the frozen retirement income product (Great-West SecureFoundation Balanced Fund)? A94. This allows the participant to retain the guaranteed income benefit and preserve the benefit base. The fund is closed to new contributions. Q95. Who is the custodian of the DB Plan assets? A95. Bank of New York Melon Q96. We understand that The Northern Trust will provide retiree payment services beginning on 1/1/2018. Can we assume that this provider will remain in order to manage the payment processing or would you like us to include pricing for these services as well? A96. Proposal should include payment services. Q97. Is a bid bond required for this RFP? A97. No. A bid bond is not required. Thank you for your interest in Gwinnett County. This addendum should be signed in the space provided below and returned with your proposal. Failure to do so may result in your proposal being deemed non-responsive. Thank you Dana Garland, CPPB Purchasing Associate III Company Name Authorized Representative

11 Report of the Actuary on the Annual Valuation of the Gwinnett County Defined Benefit Plan Prepared as of January 1, 2017

12 Cavanaugh Macdonald C O N S U L T I N G, L L C The experience and dedication you deserve April 28, 2017 Board of Trustees Gwinnett County Defined Benefit Plan 75 Langley Drive Lawrenceville, GA Dear Members of the Board: We are pleased to submit herewith the results of the annual actuarial valuation of the Gwinnett County Defined Benefit Plan prepared as of January 1, The purpose of this report is to provide a summary of the funded status of the System as of January 1, 2017 and recommend employer contributions for fiscal year ending Financial reporting requirements prescribed by Governmental Accounting Standards Board Statements Nos. 67 and 68 will be provided in separate reports. While not verifying the data at source, the actuary performed tests for consistency and reasonability. The actuarially determined contribution (ADC) for the fiscal year ending 2018 is $41,102,477, which will liquidate the unfunded accrued liability over a 16-year period. This assumes expected employee contributions of $6,530,000. In determining the County s contribution requirement we have included interest to reflect our understanding that the County makes bi-weekly contributions throughout the fiscal year. In the table below we present the County s contribution requirements if the County pays the full amount on January 1, 2018 or in bi-weekly installments throughout the 2018 fiscal year. County contribution payable January 1, 2018 $39,586,790 Interest for bi-weekly payments during 2018 fiscal year $1,515,688 County contribution payable in bi-weekly installments $41,102, Busbee Pkwy, Suite 250, Kennesaw, GA Phone (678) Fax (678) Offices in Englewood, CO Off Kennesaw, GA Bellevue, NE

13 The promised benefits of the Plan are included in the actuarially calculated employer contributions which are developed using the projected unit credit cost method. Gains and losses are reflected in the unfunded accrued liability that is being amortized by regular annual contributions as a level dollar within a 16 year period. The assumptions recommended by the actuary are in the aggregate reasonably related to the experience under the Plan and to reasonable expectations of anticipated experience under the Plan. Assuming that the annual required employer contributions to the Plan are made by the County from year to year in the future at the contributions recommended on the basis of the successive actuarial valuations, the continued sufficiency of the retirement fund to provide the benefits called for under the Plan may be safely anticipated. Future actuarial results may differ significantly from the current results presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan s funded status); and changes in plan provisions or applicable law. Since the potential impact of such factors is outside the scope of a normal annual actuarial valuation, an analysis of the range of results is not presented herein. In addition, I certify that I am a member of the American Academy of Actuaries, that I meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein, that I have experience in performing valuations for public retirement systems, that the valuation was prepared in accordance with the standards of practice prescribed by the Actuarial Standards Board, and that the actuarial calculations were performed by qualified actuaries in accordance with accepted actuarial procedures, based on the current provisions of the Plan and on actuarial assumptions that are internally consistent and reasonably based on the actuarial experience of the Plan. We trust that the report will meet the approval of the Board and will furnish the desired information concerning the financial condition of the Plan. Respectfully submitted, Todd Green ASA, FCA, MAAA Principal and Consulting Actuary

14 Table of Contents Section Item Page I Summary of Principal Results 1 II Plan Contribution Development 5 III Additional Disclosures 10 IV Assets 12 V Data 14 VI Actuarial Assumptions and Methods 18 VII Plan Provisions 21

15 Section I - Summary of Principal Results For convenience of reference, the principal results of the current valuation are summarized below. Valuation Date January 1, 2017 January 1, 2016 Active Members: a. Number 1,425 1,551 b. Covered compensation $ 95,658,479 $ 92,832,221 Retired Members, Disableds and Beneficiaries: a. Number 2,200 2,073 b. Total Annual Benefits $ 65,197,774 $ 61,174,918 Number of Terminated Vested Members Assets: a. Market Value $ 925,851,000 $ 899,516,000 b. Actuarial Value $ 966,170,000 $ 933,994,000 Actuarial Accrued Liability $ 1,220,296,657 $ 1,168,107,340 Unfunded actuarial accrued liability (UAAL) $ 254,126,657 $ 234,113,340 Amortization Period 16 years 17 years Fiscal Year Ending December 31, 2018 December 31, 2017 Total Actuarially Determined Contribution (ADC) a. Normal Cost $ 17,140,448 $ 17,319,291 b. UAAL Amortization Payment 25,141,355 22,410,378 c. Administrative Expenses 818, ,000 d. Interest Adjustment 4,532,674 4,245,344 e. Total ADC $ 47,632,477 $ 44,613,013 Total ADC a. Required County Contribution $ 41,102,477 $ 37,944,702 b. Expected Employee Contribution 6,530,000 6,668,311 c. Total ADC $ 47,632,477 $ 44,613,013 Cavanaugh Macdonald Consulting, LLC Page 1

16 Section I - Summary of Principal Results A. The promised benefits of the Gwinnett County Defined Benefit Plan are included in the actuarially calculated contribution rates which are developed using the projected unit credit cost method. Gains and losses are reflected in the unfunded accrued liability that is being amortized by regular annual contributions as a level dollar amount within a 16 year period. The plan is now closed to new participants effective January 1, The assumptions recommended by the actuary are in the aggregate reasonably related to the experience under the Plan and to reasonable expectations of anticipated experience under the Plan. The actuarially determined contribution for the fiscal year ending 2018 is $41,102,477, which will liquidate the unfunded accrued liability over a 16-year period. The following table represents the County s historical funded ratio. The funded ratio represents the percentage of the plan liability that is covered by the actuarial value of plan assets as of the valuation date. Funded Ratio 100.0% 90.0% 80.0% 70.0% 80.0% 77.4% 79.2% 74.4% 70.2% 73.5% 76.8% 76.9% 83.9% 88.9% 80.0% 79.2% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Cavanaugh Macdonald Consulting, LLC Page 2

17 Section I - Summary of Principal Results B. The major benefit and contribution provisions of the County as reflected in the valuation are summarized in Section VII. There have been no changes since the previous valuation. C. Section VI of this report outlines the full set of actuarial assumptions and methods used in the valuation. D. The projected unit credit cost method was used to prepare the valuation. Section VI contains a brief description of the actuarial cost method. E. Comments on the valuation results as of January 1, 2017 are given in Section I and further discussion of the contributions is set out in Section II. Contributions Payable A. The Gwinnett County Defined Benefit Plan states that each member shall contribute an amount equal to the Member s Compensation multiplied by a specified percentage based on the contribution rates associated with Schedules B and C of the plan. As of January 1, 2017 the estimated employee contributions are $6,530,000. B. The County contribution for the 2018 plan year consists of three components. The first component is the normal cost which includes administrative expenses. Under the projected unit credit cost method, the normal cost represents benefits that accrue over a one year period. Thus, for this year s valuation, this number represents the value of benefits to accrue during the 2017 plan year. The normal cost is $17,958,448 which includes administrative expenses of $818,000. Of the $17,958,448 the employees pay $6,530,000 which leaves $11,428,448 as the employer normal cost. C. The second component of the County contribution is an interest adjustment to reflect that the payment is determined on the valuation date and payable one year from the valuation date assuming contributions are deposited on a bi-weekly basis. This amount is $4,532,674. If the County chooses to pay the entire required contribution on January 1, 2018 the interest adjustment will be reduced by $1,515,688. D. The third component is the amortization of the unfunded liability. The unfunded liability is amortized on a level dollar basis over a closed 16-year period. On this basis, the amortization cost is $25,141,355. Cavanaugh Macdonald Consulting, LLC Page 3

18 Section I - Summary of Principal Results E. The total required contribution to the Plan for the 2018 fiscal year is $47,632,477. The employee portion of this required contribution is $6,530,000, while the County s portion of this required contribution is $41,102,477. Under the Official Code of Georgia the minimum funding standards are deemed to have been met if the employer contribution is equal to or greater than the annual required contribution as determined in accordance with the provisions of GASB No. 25 and No. 27. The County s actuarially determined contribution satisfies Official Code of Georgia Assets As of January 1, 2017 the total market value of assets amounted to $925,851,000. The actuarial value of assets used for the current valuation was $966,170,000. Section IV shows the development of the actuarial value of assets as of January 1, The method for determining the Actuarial Value of Assets recognizes investment gains and losses over a five year period. Comments on the Valuation The valuation was prepared in accordance with the actuarial assumptions and the actuarial cost method set forth in Section VI. The valuation shows that the System has a total actuarial accrued liability of $1,220,296,657. The liability on account of present retired members, beneficiaries of deceased members, and disabled members is $805,313,794. Terminated members account for $27,482,532 of the liability. $387,500,331 of the actuarial accrued liability is associated with the active members. Against these liabilities, the System has actuarial value of assets of $966,170,000 as of January 1, There remains $254,126,657 as the amount of unfunded accrued liability. The amount necessary to fully amortize the unfunded liability over a 16 year period is $25,141,355. The development of the unfunded accrued liability is shown in Section II. The normal cost contribution is equal to the actuarial present value of benefits accruing during the current year. For the 2017 plan year the normal cost contribution including expenses is determined to be $17,958,448 and is determined under the projected unit credit method. An interest adjustment of $3,016,986 reflects that the required contribution is determined on January 1, 2017 and payable one year from the valuation date. The additional interest adjustment of $1,515,688 reflects the County will contribute the required contribution bi-weekly throughout the year. If the County elects to pay the actuarial determined contribution in full on January 1, 2018, the bi-weekly interest adjustment is not necessary. Cavanaugh Macdonald Consulting, LLC Page 4

19 Section II - Plan Contribution Development Normal Cost The Normal Cost represents active participant benefits that are to accrue during the 2017 plan year and is a component of the contribution. The following table shows the Normal Cost as it is attributable to plan benefits under the current plan. January 1, 2017 January 1, Normal Cost a. Retirement Benefits $ 15,890,671 $ 15,969,884 b. Termination Benefits 750, ,849 c. Disability Benefits 389, ,979 d. Death Benefits 110, ,579 e. Total $ 17,140,448 $ 17,319, Expense Load $ 818,000 $ 638, Normal Cost as a Percent of Payroll a. With the Expense Load 18.77% 19.34% 100% 95% 90% 85% 80% 75% 70% Normal Cost Rate by Benefit Type Retirement Termination Disability Death Expense Load Cavanaugh Macdonald Consulting, LLC Page 5

20 Section II - Plan Contribution Development Actuarial Accrued Liability The Actuarial Accrued Liability represents the obligations of the plan as of the valuation date for active and inactive participant benefits. The following table shows the components of the liability. January 1, 2017 January 1, Actuarial Accrued Liability a. Inactive Participants i. Inactive Participants Receiving Benefits $ 805,313,794 $ 761,644,538 ii. Terminated Participant Benefits Deferred 27,482,532 27,958,138 iii. Total Inactive Present Value 832,796, ,602,676 b. Active Participants Liability $ 387,500,331 $ 378,504, Total Actuarial Accrued Liability $ 1,220,296,657 $ 1,168,107, % Actuarial Accrued Liability by Source 80% 60% 40% 20% 0% Inactive Receiving Benefits Terminated Vested Actives Cavanaugh Macdonald Consulting, LLC Page 6

21 Section II - Plan Contribution Development Development of the Unfunded Actuarial Accrued Liability The Unfunded Actuarial Accrued Liability represents the Actuarial Accrued Liability over the Actuarial Value of Assets. The Unfunded Accrued Liability as of January 1, 2017 is $254,126,657, in other words, the plan liabilities exceed the plan assets by this amount as of the valuation date. The following table shows the components of the Unfunded Actuarial Accrued Liability of the plan. January 1, 2017 January 1, Actuarial Accrued Liability a. Present Active Members $ 387,500,331 $ 378,504,664 b. Present retired members, beneficiaries and former members entitled to deferred vested benefits 832,796, ,602,676 c. Total $ 1,220,296,657 $ 1,168,107, Actuarial Value of Assets $ 966,170,000 $ 933,994, Unfunded Actuarial Accrued Liability (1c.) - (2) $ 254,126,657 $ 234,113, % Actuarial Accrued Liability 95% 90% 85% 80% 75% Actuarial Value of Assets Unfunded Actuarial Accrued Liability Cavanaugh Macdonald Consulting, LLC Page 7

22 Section II - Plan Contribution Development Development of the Actuarial Gain / (Loss) The actuarial valuation process relies heavily on demographic and economic assumptions. Actuarial gains and losses occur from year to year when actual Plan experience is different from assumed experience. Experience gains and losses are reflected in the Unfunded Actuarial Accrued Liability and are amortized over a closed period. Actuarial gains represent beneficial experience that reduces contribution rates while actuarial losses increase contribution rates. The table below develops the actuarial gains / (losses). (1) Unfunded Accrued Liability (UAL) as of January 1, 2016 $ 234,113,340 (2) Normal Cost 17,957,291 (3) Contributions 34,688,000 (4) Interest 16,430,864 (5) Expected UAL at January 1, 2017 (1) + (2) - (3) + (4) 233,813,495 (6) Actual UAL at January 1, ,126,657 (7) Total Gain / (Loss) (5) - (6) (20,313,162) (8) Asset Gain / (Loss) (2,496,165) (9) Assumption Change 0 (10) Liability Gain / (Loss) (7) - (8) - (9) $ (17,816,997) Cavanaugh Macdonald Consulting, LLC Page 8

23 Section II - Plan Contribution Development Development of the Actuarial Gain / (Loss) 1. Net Actuarial Gains/(Losses) During the 2016 Plan Year: a. Due to Salary ($7,172,654) b. Due to Investment Performance ($2,496,165) c. Due to Turnover ($6,240,075) d. Due to New Retirements ($5,039,442) e. Due to Mortality $904,920 f. Due to Disabled Retirements $169,859 g. Total ($19,873,557) 2. Changes During the 2016 Plan Year due to: a. Assumption changes $0 b. Method changes $0 c. Plan changes $0 d. Total change $0 3. Other Effects (including Data Adjustments) ($439,605) 4. Total Gain / (Loss) as of January 1, 2017 ($20,313,162) 5. Comments on Gains/(Losses): Salary/Service: Average salary increases of 7.3% compared to expected increases of 4.6%. Investment Performance: 6.7% actual vs. 7.0% expected return on the actuarial value of assets. Turnover: Net effect on the valuation liabilities of terminations of employment different from what was anticipated in the aggregate by the assumptions related to those events. New retirements: Net effect of differences in expected vs. actual numbers of, and benefits for, new retirements and refund of employee contributions. Assumption Changes: None Method Changes: None Plan Changes: None Other Effects: Data adjustments, contribution timing, and differences between actual and expected benefit payments Cavanaugh Macdonald Consulting, LLC Page 9

24 Section III Additional Disclosures A. Plan Description: The Gwinnett County Defined Benefit Plan is a single-employer defined benefit plan and the contributing entity is Gwinnett County. The employees covered are general employees and public safety employees. The Plan provides retirement benefits to participants according to provisions of the plan document normally in the form of a life annuity. The Plan may be amended at any time, at the sole discretion of the County. The distribution of the number of employees by type of membership is as follows: Number of Participants as of January 1, Retired participants, disabled and beneficiaries currently receiving benefits 2, Terminated participants and beneficiaries 833 entitled to benefits but not yet receiving benefits 3. Active Participants 1, Total 4,458 Effective January 1, 2007 the plan is closed to new entrants. Cavanaugh Macdonald Consulting, LLC Page 10

25 Section III Additional Disclosures B. Summary of Actuarial Methods and Assumptions: Valuation date January 1, 2017 Actuarial cost method Projected Unit Credit Amortization method Level Dollar Amortization period Closed Remaining amortization period 16 years as of 1/1/2017 Asset valuation method Five-year smoothed market value Actuarial assumptions: Investment rate of return (includes inflation) 7.00% Projected salary increases (includes inflation) 4.50% % Price Inflation 3.00% Wage Inflation 4.00% Cost-of-living adjustments 1.00% Payroll increase 0.00% C. Schedule of Funding Progress Actuarial UAAL as a Actuarial Accrued Unfunded Percentage Actuarial Value of Liability AAL Funded Covered of Covered Valuation Assets (AAL) (UAAL) Ratio Payroll Payroll Date (a) (b) ( b - a ) ( a / b ) (c) (( b - a) / c ) January 1, 2017 $ 966,170,000 $1,220,296,657 $ 254,126, % $ 95,658, % January 1, 2016 $ 933,994,000 $1,168,107,340 $ 234,113, % $ 92,832, % January 1, 2015 $ 887,207,000 $ 997,597,936 $ 110,390, % $ 98,504, % January 1, 2014 $ 802,857,000 $ 956,487,667 $ 153,630, % $ 103,602, % January 1, 2013 $ 704,197,000 $ 916,191,889 $ 211,994, % $ 110,766, % January 1, 2012 $ 652,425,000 $ 849,164,503 $ 196,739, % $ 116,610, % Cavanaugh Macdonald Consulting, LLC Page 11

26 Section IV Assets Reconciliation of Market Value of Assets (in thousands) 1. Market Value of Assets as of January 1, 2016 $899, Adjustment $ - 3. Expenditures a. Benefit Payments $(63,539) b. Administrative Expenses (818) c. Total $(64,357) 4. Income a. Employer Contributions $ 28,036 b. Employee Contributions 6,652 c. Total $ 34, Investment Income a. Investment gains/losses $ 59,859 b. Investment expense (3,855) c. Total $ 56, Market Value of Assets as of January 1, 2017 $925,851 7 Rate of Return on Market Value of Assets 6.33% Cavanaugh Macdonald Consulting, LLC Page 12

27 Section IV - Assets Valuation Date January 1: Development of Actuarial Value of Assets (in thousands) 1. Actuarial Value Beginning of Year $ 887,207 $ 933, Market Value End of Year 899, , Market Value Beginning of Year $ 921,171 $ 899, Cash Flow a. Contributions $ 40,488 $ 34,688 b. Benefit Payments (59,323) (63,539) c. Administrative Expenses (638) (818) d. Investment Expenses (4,209) (3,855) e. Net $ (23,682) $ (33,524) 5. Investment Income a. Market Total $ 2,027 $ 59,859 b. Assumed Rate 8.00% 7.00% c. Amount for Immediate Recognition 77,124 65,783 d. Amount for Phased-In Recognition $ (75,097) $ (5,924) Phased-In Recognition of Investment Income a. Current Year: 0.20 *5d $ (15,019) $ (1,185) $ - $ - $ - $ - b. First Prior Year (2,081) (15,019) (1,185) c. Second Prior Year 13,645 (2,081) (15,019) (1,185) - - d. Third Prior Year 4,557 13,645 (2,081) (15,019) (1,185) - e. Fourth Prior Year (7,757) 4,557 13,645 (2,081) (15,019) (1,185) f. Total Recognized Investment Gain $ (6,655) $ (83) $ (4,640) $ (18,285) $ (16,204) $ (1,185) 7. Actuarial Value End of Year $ 933,994 $ 966, Difference Between Market & Actuarial Values $ (34,478) $ (40,319) $ (35,674) $ (17,389) $ (1,185) $ - 9. Rate of Return on Actuarial Value 7.55% 6.73% The actuarial value of assets recognizes assumed investment income (line 5c) fully each year. Differences between actual and assumed investment income (line 5d) are phased in over a closed 5 year period. During periods when investment performance exceeds the assumed rate, the actuarial value will tend to be less than market value. During periods when investment performance is less than assumed, the actuarial value will tend to be greater than the market value. Cavanaugh Macdonald Consulting, LLC Page 13

28 Section V - Data A. Data regarding the membership of the System for use as a basis of the valuation were furnished by the County and plan administrator. The valuation included active members with annualized compensation totaling $95,529,702. B. The following table shows the number of retired members and beneficiaries as of January 1, 2017 together with the amount of their annual retirement benefits payable under the System as of that date. The Number and Average Annual Benefits of Retired Members, Disabled Members and Beneficiaries as of January 1, 2017 Average Annual Group Number Benefits Service Retirements 2,014 $30,854 Disability Retirements 21 17,539 Beneficiaries of Deceased Members ,306 Total 2,200 $29,635 C. Table 1 on the next page shows the distribution by age and years of membership service of the number of active members included in the valuation, while Table 2 shows the number and annual benefits of retired members, disabled members and beneficiaries included in the valuation, distributed by age. Table 3 shows the reconciliation of valuation data from last year s valuation carried forward to this year s valuation. Cavanaugh Macdonald Consulting, LLC Page 14

29 Section V - Data Table 1: Distribution of Active Members by Age and Service Groups as of January 1, 2017 Attained Age Completed Years of Service Under 1 1 to 4 5 to 9 10 to to to to to 34 > 35 Total Under 25 Average Pay 25 to 29 Average Pay 30 to Average Pay 56,900 57,216 56, to Average Pay 56,268 61,211 82,083 58, to Average Pay 57,388 66,396 69,568 64,740 64, to Average Pay 56,631 63,935 73,511 72,450 66, to Average Pay 54,048 63,691 72,236 75,827 69,271 67, to Average Pay 49,267 56,049 67,723 72,169 86, ,441 59, to Average Pay 43,296 59,911 86,325 76,296 95,464 98,079 67, to Average Pay 42,840 65,671 65,481 89,588 86,936 62, & up Average Pay 38,138 36,090 37,114 Total Count ,425 Average Pay 54,557 62,958 72,543 74,090 79,367 99,123 64,185 Cavanaugh Macdonald Consulting, LLC Page 15

30 Section V - Data Table 2: Number of Retired Members, Disabled, and Beneficiaries and their Benefits Attained Age Number of Members Total Annual Benefits Average Annual Benefit 50 & Under 51 $ 1,582,494 $ 31, ,725,901 47, ,089,547 42, ,123,508 33, ,511,815 22, ,092,595 17, ,181,846 14,168 Over ,068 11,711 Total 2,200 $ 65,197,773 $ 29,635 Cavanaugh Macdonald Consulting, LLC Page 16

31 Section V - Data Table 3: Reconciliation of Plan Participants as of January 1, 2017 Inactive Participants Inactive with Participants Active Disabled Deferred Receiving Participants Participants Benefits Benefits Total January 1, , ,052 4,479 Retirements (103) (1) (38) 142 Deaths (2) (1) (1) (37) (41) Disabled (2) 2 Nonvested Terminations (5) (5) Vested Terminations (14) 14 Rehires Survivors Benefits Expired (2) (2) Transfer Out Transfer In Correction Status Change Lump Sum/Refund of Contributions (4) (4) Net Change (126) 0 (22) 127 (21) January 1, , ,179 4,458 Cavanaugh Macdonald Consulting, LLC Page 17

32 Section VI - Actuarial Assumptions and Methods A. Investment Return: 7.00% per year, compounded annually. B. Salary Increases: Representative values of the assumed annual rates of salary increases are shown in the following table. Years of Salary Service Increase Under % and Over 4.50 C. Mortality: Pre-Retirement Mortality Male Rates: 1983 Group Annuity Mortality Table multiplied by 50%. Female Rates: 1983 Group Annuity Mortality Table Post Retirement Healthy Mortality 1994 Group Annuity Mortality Static Table Projected to 2001 using scale AA for males and females. Post Retirement Disabled Mortality 1994 Group Annuity Mortality Static Table Projected to 2001 using scale AA for males and females. Cavanaugh Macdonald Consulting, LLC Page 18

33 Section VI - Actuarial Assumptions and Methods D. Separations from Active Service: Representative values of the assumed annual rates of withdrawal and disability are shown in the following table. Age Withdrawal Disability Under % 0.00 % and Over Disability: Male rates (used for both sexes) derived from a 1977 Social Security Administration study multiplied by 50%. Incidence of disability resulting in eligibility for both disability benefits under the county retirement plan and the Social Security. Retirement: An experience based, age related set of rates; sample rates are as follows: Age Retirement* Age Retirement* % 65 50% % % % % * If service is at least 30 years or when member first becomes eligible for Rule of 75, the rate is 37.5% E. Administrative Expenses: An expense load is determined to account for administrative expenses to be paid from the trust. Expenses are estimated to be $818,000 for the plan year. Cavanaugh Macdonald Consulting, LLC Page 19

34 Section VI - Actuarial Assumptions and Methods F. Actuarial Value of Assets: The actuarial value of assets recognizes a portion of the difference between the market value of assets and the expected market value of assets, based on the assumed valuation rate of 7.00% effective January 1, The amount recognized each year is 20% of the difference between market value and expected market value. G. Actuarial Cost Method: Projected Unit Credit. This cost method measures past service liabilities as the actuarial present value of benefits accrued for service up to the valuation date, but based on salaries projected to the date of assumed retirement for the plan. H. Amortization of Unfunded Accrued Liability: Level dollar over a closed amortization period of 17 years beginning January 1, I. Beneficiary: The plan provides either a lump-sum benefit or an annuity to the beneficiary of a deceased inactive participant. Therefore all participants are assumed to have a beneficiary and such beneficiary is assumed to be the same age as the participant. J. Percent Married: For the purposes of valuing the spouse pre-retirement survivor annuity, 50% of the plan participants are assumed married with males three years older than the spouse. K. Load for Unused Sick Leave and Retirement Reserve Leave: Members can apply unused sick leave or retirement reserve leave toward Credited Service in order to meet retirement eligibility requirements. The three year experience study covering the period January 1, 2006 through January 1, 2009 found that members are able to retire one year earlier than the retirement eligibility condition allowable by the Plan through conversion of unused sick leave or retirement reserve leave. Thus, retirement benefits and liabilities for Plan B and Plan C members are increased by 3.50% to estimate the increase in benefit due to the application of unused sick leave or retirement reserve leave toward Credited Service. Cavanaugh Macdonald Consulting, LLC Page 20

35 Section VII - Plan Provisions A. Effective Date January 1, 2007 B. Participation Each Employee who was a participant in the ACCG Plan on the day before the Effective Date of this Plan shall be a participant in this plan. Each employee hired before January 1, 2007 is eligible to participate as of his employment commencement date. No employee hired on or after January, shall be eligible to participate in this Plan. An Employee who has a termination date prior to December 31, 2006 with a reemployment commencement date on or before December 31, 2007 shall be eligible to participate in the plan provided he has not incurred a one-year break in service. Effective January 1, 2008, only those employees participating in the plan on December 31, 2007 shall be eligible to participate in the plan. C. Credited Service Measurement of a participant s service as an employee after the original effective date of the plan that is used to determine the participant s accrued benefit. Credited service shall include only full-time service and shall be determined under the Elapsed Time Method. Credited service shall include service prior to the effective date of the plan, sick leave, and retirement reserve leave. The County as part of an employment contract with Appointed officials may agree to provide additional Credited Service. In no event shall the additional credited service exceed five years. D. Compensation Total amounts of all payments, direct or indirect, made by the County to an employee for services rendered to the County, for a calendar year which ends within a Plan Year, as defined in Code Section 3401(a) for purposes of tax withholding at the source excluding overtime, overtime premium, scheduled overtime and scheduled overtime premium. Compensation shall include before-tax or salary deferral contribution made to this plan or any other plan of the County. E. Average Final Compensation Arithmetic average of Compensation paid to a participant by the employer for the highest five consecutive years of Credited Service, ignoring the breaks in service, out of the employee s last 10 years of credited service earned immediately prior to termination date. Cavanaugh Macdonald Consulting, LLC Page 21

36 Section VII - Plan Provisions F. Schedule A Benefit established in 2004 for the noncontributory defined benefit plan previously adopted by Gwinnett County and known as the Pre-Amended Pension Plan G. Schedule B Benefit established in 2004 for the contributory defined benefit plan previously adopted by Gwinnett County and known as the 1995 Amended Pension Plan and subsequently amended and restated H. Schedule C Benefit established in 2004 for the contributory defined benefit plan adopted by Gwinnett County as of November 1, 2004 I. Normal Retirement Benefit Eligibility For those members with an employment date or a reemployment commencement date prior to November 1, 2004, the later of the date the Participant attains age 65 and completes three years of vesting service. For employees hired on or after November 1, 2005, the later of the date the participant attains age 65 and five years of vesting service. Benefit Amount Schedule A or B Schedule C 2.25% of a participants Average Monthly Compensation multiplied by years of full time Credited Service. 2.50% of a participants Average Monthly Compensation multiplied by years of full-time credited service. Cavanaugh Macdonald Consulting, LLC Page 22

37 Section VII - Plan Provisions J. Early Retirement Benefit Eligibility Schedule A: Earlier of 1) 60 years and 10 years of service, or 2) 30 Years of service, regardless of age Schedule B or C: Earlier of 1) Age 60 and 10 years of service, or 2) 30 Years of service, regardless of age, or 3) Age 50 and the Rule of 75 Benefit Amount Schedule A, B or C Schedule C Computed as a Normal Retirement Benefit that is actuarially reduced for those members retiring with less than 30 years of service Computed as a Normal Retirement Benefit that is actuarially reduce for those member that have not obtained age 50 and the Rule of 75 K. Late Retirement Eligibility Date participant actually retirees from employment with the County after his normal retirement date Benefit Amount Computed as a Normal Retirement Benefit Cavanaugh Macdonald Consulting, LLC Page 23

38 Section VII - Plan Provisions L. Disability Benefit Eligibility 10 Years of service and is determined to be totally disabled by the Social Security Administration. Benefit Amount Calculated as Normal Retirement Benefit M. Pre-Retirement Death Benefit Eligibility If the participant dies while an Employee of the County, the Plan provides a lifetime pre retirement survivor annuity to the spouse. If the participant is not married at the time of death, the participant s dependent child will receive the same benefit in total until the child reaches age 18 at which time the benefit will cease. Benefit Amount 50% of the Participant s non forfeitable accrued benefit determined as of the date of the participants death. Cavanaugh Macdonald Consulting, LLC Page 24

39 Section VII - Plan Provisions N. Post-Retirement Death Benefit Eligibility If a participant dies after he retires his beneficiary may receive a post-retirement death benefit. Benefit Amount O. Vested Termination Eligibility If the monthly benefit was less than $100, the post-retirement death benefit is equal to $5,000. If the monthly benefit was $100 or greater but less than $300, the Post-Retirement Death benefit is equal to $10,000 If the monthly benefit was $300 or more, the Post Retirement Death Benefit is equal to $15,000. Members employed prior to November 1, 2004 must have completed 3 years of service. Those members employed on or after November 1, 2004 must have competed 5 years of service upon termination. Benefit Amount Computed as a normal retirement benefit as of the date of termination payable upon reaching age 65. P. Non-Vested Termination A member terminating from the plan that is not 100% vested in the accrued benefit is entitled to a refund of their employee contributions with interest. Cavanaugh Macdonald Consulting, LLC Page 25

40 Section VII - Plan Provisions Q. Cost-of-Living Adjustments Schedule A None Schedule B or C 1.00% annually R. Normal Form of Benefit Single Life Annuity S. Contributions Member County Schedule A: None Schedule B: Members are required to contribute 5.75% of Compensation Schedule C: Members are required to contribute 9.00% of Compensation The County contributes an actuarially determined amount which, together with member contributions, equals the sum of the normal cost and payments for the amortization of the unfunded actuarial accrued liability. Cavanaugh Macdonald Consulting, LLC Page 26

41 Item 1 Cover Page ADVISED ASSETS GROUP, LLC Disclosure Brochure for: Online Investment Guidance, Online Investment Advice, & Managed Account Service & Empower Retirement IRA 8515 East Orchard Road Greenwood Village, CO Telephone for Participants in Employer-Sponsored Retirement Plans: Telephone for Account Holders of the Empower Retirement IRA: August 28, 2017 This Brochure provides information about the qualifications and business practices of Advised Assets Group, LLC ( AAG ). Specifically, this Brochure provides information on the advisory services provided by AAG and sub-advised by Morningstar Investment Management, LLC ( Morningstar Investment Management ). If you have any questions about the contents of this Brochure, please contact us at ( The information in this Brochure has not been approved or verified by the Securities and Exchange Commission ( SEC ) or by any state securities authority. AAG is a registered investment adviser. Registration of AAG does not imply any level of skill or training. The oral and written communications of AAG provide you with information about which you determine to hire or retain AAG. Additional information about AAG is available on the SEC website at 1

42 Item 2 Material Changes AAG provides this disclosure document on Part 2A of Form ADV ( Brochure ) to its existing, new, and prospective investment management clients. On an annual basis, we will provide you with a summary of any material changes to this Brochure and subsequent Brochures within 120 days of the close of each fiscal year, or no later than April 30th. AAG will update Item 2 Material Changes to discuss specific material changes made to the Brochure since its previous update, and will provide clients with a summary of such changes. We will also reference the date of our last annual update of our Brochure. We will further provide you with a new Brochure as necessary based on changes or new information, at any time, without charge. You may request a copy of this Brochure free of charge at the telephone number listed on the cover page of this Brochure. This section of the Brochure highlights and discusses any changes that were made since AAG s last update dated April 12, This Brochure was updated to address any out-of-date information; additionally we made other changes throughout the document in order to provide information clearly and concisely. There were no material changes to this Brochure from its last filing. Additional information about AAG is also available via the SEC s web site The SEC s web site also provides information about any person affiliated with AAG who is registered, or are required to be registered, as an investment adviser representative with AAG. 2

43 Item 3 -Table of Contents Item 1 Cover Page... 1 Item 2 Material Changes... 2 Item 3 -Table of Contents... 3 Item 4 Advisory Business... 4 Item 5 Fees and Compensation... 7 Item 6 Performance-Based Fees and Side by Side Management... 9 Item 7 Types of Clients... 9 Item 8 Methods of Analysis and Investment Strategies... 9 Item 9 Disciplinary Information Item 10 - Other Financial Industry Activities and Affiliations Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Item 12 Brokerage Practices Item 13 Review of Accounts Item 14 Client Referrals and Other Compensation Item 15 - Custody Item 16 Investment Discretion Item 17 Voting Client Securities Form ADV Part 2B Brochure Supplement

44 Item 4 Advisory Business Description of Advisory Firm Advised Assets Group, LLC ( AAG ) is, and has been a registered investment adviser since 2000 and submits notice filings with state securities divisions in all 50 states, the District of Columbia, Guam, US Virgin Islands and Puerto Rico. AAG offers investment management and advisory services primarily to plan sponsors of employer-sponsored retirement plans such as 401(a), 401(k), 403(b) and 457 plans, including government entities and their participants ( participants or individuals ) for which AAG has an agreement with the administrative services provider ( recordkeeper ). AAG additionally makes available a suite of services to all account holders of the Empower Retirement IRA ( IRA account holder, account holder or individual ). More information - including an applicable Brochure - for all of the services offered by AAG can be obtained by contacting AAG at the number provided on the cover page of this Brochure or by visiting AAG s website at: AAG s principal place of business is located in Greenwood Village, CO. Types of Services AAG provides a full range of direct account holder-level and participant-level investment services (the Services ) and indirectly through private-label arrangements with institutional partners. The Services include Online Investment Guidance, Online Investment Advice and the Managed Account service as well as Spend-Down Advice, Financial Planning Service and Retirement Income Projection Tools and Services. AAG provides its Services through a proprietary, computer-based software program, developed and maintained by Morningstar Investment Management LLC ( Morningstar Investment Management ). Enrollment in any of AAG s Services does not guarantee future results and is not a guarantee that Plan participants or account holders will achieve their individual retirement goals. Morningstar Investment Management LLC Morningstar Investment Management is a registered investment adviser wholly-owned by Morningstar, Inc. and is not affiliated with AAG or any company that is affiliated with AAG. Morningstar Investment Management is located in Chicago, IL and a copy of their Form ADV Part 2A brochure may be obtained at Morningstar Investment Management serves as an independent financial expert ( IFE ), in accordance with the Department of Labor SunAmerica Advisory Opinion A, dated December 14, 2001 (the SunAmerica Opinion ). The plan, Plan Sponsor or plan fiduciary must select and maintain at all times investment options that cover broad asset categories. The investment options selected for the plan or IRA generally consists of a broad range of asset classes (for example, mutual funds in the fixed income/cash alternatives, bond, large cap, small cap, small/mid cap and international asset classes called investment options some of which may be proprietary funds of AAG s affiliated investment company, Great-West Funds, Inc. or funds advised by AAG s affiliated investment adviser Putnam Investment Management, LLC. More information is provided in Item 10 Other Financial Industry Affiliations. Item 8 of this Brochure discusses the general risks of investing; such risks associated with the investment options can vary significantly with each particular investment category and the relative risks of categories may change. Accordingly, AAG may make changes from time to time with regard to the availability of certain investment options.) The fees, risks, plan sponsor/plan provider/participant/account holder responsibilities and limitations for each of these services are discussed in greater detail in this Brochure. Fees and expenses are also fully explained in the respective prospectus and Statement of Additional Information materials which accompany each investment option, as applicable. Certain of AAG s Services rely on Morningstar Investment Management s proprietary methodology which is based on a review of available quantitative data to analyze and screen the investment options within a plan. Morningstar Investment Management also applies qualitative analysis by investment professionals, such as evaluations of investment managers, portfolios and individual investments. The primary sources of information used by Morningstar Investment Management are the extensive databases and methodologies of Morningstar Investment Management and/or its affiliates, and interviews with investment managers. Other sources include financial publications, annual reports, prospectuses, press releases, and filings with the SEC. Morningstar Investment Management combines this information with other factors including actuarial data, stock market exposure, probability analysis, and mean-variance optimization into a proprietary software program to analyze a complex set of market data and variables. The result is an advanced model that can provide investment recommendations and a projection of different outcomes. Using this model, Morningstar Investment Management develops an investment strategy tailored to your investment goals. 1. Online Investment Guidance Service AAG s Online Investment Guidance service developed by Morningstar Investment Management provides participants with access to sophisticated but easy-to-use online account planning, advisory and analytical tools that assist the participant/account holder in selecting their own asset classes and building a diversified portfolio. Using the Online Investment Guidance service, participants/account holders are provided with general asset allocation information based on the investment options that are available within the participant s plan or are available in the Empower Retirement IRA. In addition, with the Online Investment Guidance service a participant/account holder can receive an objective savings rate recommendation that may assist the participant in achieving his/her retirement goals. The Online Investment Guidance service does not provide fund-specific recommendations. The asset allocation recommendations, education and other investment-related services provided under the Online Investment Guidance service do not constitute investment advice under the Investment Advisers Act of Online Investment Advice Service AAG s Online Investment Advice service is also based on the software program developed by Morningstar Investment Management and provides the participant/account holder with retirement goal forecasting advice and fund-specific asset allocation recommendations 4

45 tailored to the specific participant s/account holder s financial situation and retirement goals. The Online Investment Advice service is geared for individuals who wish to manage their own retirement account with the assistance of the Online Investment Guidance service tools and investment advice. The Online Investment Advice service provides the participant/account holder with a retirement goal forecast through the use of various assumptions and hypothetical financial and economic scenarios based on a variety of different factors such as historic returns, market volatility, cross-correlations, calculated risk premiums, interest rate fluctuations, inflation and market conditions and other factors; all of which have limitations, however. The individual can interact with the Online Investment Advice service to see how changes in the individual s decisions about their savings, expected retirement age, level of investment risk and retirement income goal may affect the system s forecast. Participants/account holders who enroll in the Online Investment Advice service are responsible for determining the portfolio allocation that is best suited for their needs and which meets their investment strategy. The investment recommendations provided by the Online Investment Advice service are limited to the available investment options within the participant s specific retirement plan or in the Empower Retirement IRA. The Online Investment Advice service does not make any recommendations concerning investing in any individual stocks or other asset classes, including employer stock that may be an investment option under the participant s retirement plan. Participants/account holders are informed when accessing the Online Investment Advice service that the advice should not be considered an approval or endorsement of the available investment options. Participant/IRA account holder Responsibilities Participant/account holders are responsible for making their investment decisions and may implement the Online Investment Advice service recommendations either online or by phone. Participants/account holders are also solely responsible for reviewing and updating the information they input in the Online Investment Advice service with respect to the completeness, accuracy and timeliness of the information. Participants/account holders should review their retirement accounts periodically to monitor changes in the market and the value of their investments. A failure by an individual to review and update their account information through the Online Investment Advice service may materially affect the content and value of the Service. Limitations on the Online Investment Guidance and the Online Investment Advice Services The recommendations provided through the Online Investment Advice service and the information provided through the Online Investment Guidance service are estimates only based on the responses or other information provided by or about the participant/account holder. Neither AAG nor Morningstar Investment Management make any guarantees or warranties, express or implied, as to the accuracy, timeliness, or completeness of such information. The Online Investment Advice and Online Investment Guidance services are also subject to the general market and financial conditions existing at the time of such usage. The retirement goal forecast and investment recommendations provided by the Online Investment Advice and the information provided through the Online Investment Guidance services are not a guarantee of future results and are not a guarantee that a participant/account holder will achieve their retirement goals. The Online Investment Advice and the Online Investment Guidance services should only be used by participants/account holders as a tool in their retirement planning and not as a substitute for their own informed judgment. Neither AAG nor Morningstar Investment Management has an obligation to update any information for a specific individual or to proactively contact the individual to obtain updated information. A failure by an individual to review and update account information through the Online Investment Advice and Online Investment Guidance services may materially affect the content and value of services received from AAG. 3. Managed Account Service AAG offers a discretionary managed account service ( Managed Account ), a professional and flexible asset management program based on data resulting from the methodologies and proprietary software program developed and employed by Morningstar Investment Management. In the Managed Account service, AAG has discretionary authority over the allocation of available investment options, without prior participant/account holder approval of each transaction. All ongoing investment transfers and investment direction changes are implemented for individuals enrolled in the Managed Account service. The Managed Account service designs a specific asset allocation portfolio for the participant/account holder that reflects the individual s retirement goals, life stages, specified risk constraint and overall financial situation, taking into consideration other assets and investments not included within the plan or IRA (based on information provided by the individual specific to their account). On a periodic (approximately quarterly) basis, individual accounts in the Managed Account service are re-forecasted, which may include rebalancing and reallocating the individual s asset allocation portfolio in order to maintain alignment with the allocation percentages determined by Morningstar Investment Management through the use of various assumptions and hypothetical financial and economic scenarios based on a variety of different factors such as historic returns, market volatility, cross-correlations, calculated risk premiums, interest rate fluctuations, inflation, market conditions, and the personal financial circumstances of the participant/account holder. Participants/account holders receive an account update and forecast statement annually and can update their personal information at any time by calling AAG at their plan s toll-free customer service number, or by visiting the appropriate website. Some plan providers may offer a guaranteed lifetime benefit withdrawal option to plan participants who are approaching retirement or are in retirement. If the plan provider offers this service and if the participant meets the retirement criteria established by the plan provider or plan sponsor, the investment strategy may include a suggested amount that can be withdrawn while striving to maintain income throughout retirement. It may also include information about allocating a portion of the managed account balance for the purchase of an annuity or other guaranteed income product. 5

46 Limitations on the Managed Accounts Service When participants/account holders enroll in the Managed Account service, the individual must transfer and allocate their entire retirement account balance to the Managed Account. For participants, there is an exception of employer stock and employer directed monies. Partial management of a participant s/account holder s account whereby the individual is invested in other investment options, such as individual stocks, other asset classes outside of the available investment options, or self-directed brokerage accounts while also participating in the Managed Account service is not an available alternative. Participant/account holder balances in any of these investment options or vehicles must be liquidated, subject to plan and/or investment provider restrictions, or the participant/account holder cannot be enrolled in the Managed Account service. For participants, certain outside non-advisable assets may be permitted while also participating in the Managed Account service; however, the participant s entire account balance that is advisable must be allocated to the Managed Account service. Once enrolled in the Managed Account service, participants/account holders delegate certain account management functions to AAG including functionality for fund-to-fund transfers, change fund allocations, the dollar cost averaging tool and/or the rebalancer tool. However, individuals in the Managed Account service retain full inquiry access to their account and may still request approval for loans or take a distribution withdrawal, if permissible. Participants/account holders may un-enroll at any time from the Managed Account service and, once they do so, they resume full responsibility for the investment management of their account. An individual may un-enroll online or by contacting an AAG representative. 4. Spend-Down Advice Participants/account holders who are enrolled in any of AAG s Services discussed above are also provided with an additional feature of Spend-Down Advice based on Morningstar Investment Management s methodology, which provides the individual with retirement planning tools. The Spend-Down Advice illustrates how long the desired income may last in retirement and determines how much spendable income the participant/account holder may be able to sustain throughout their retirement years. The Spend-Down Advice provides both the amount and sources of income that can be spent throughout their retirement years. The services provided under Spend-Down Advice provide projections of spendable income and do not constitute investment advice under the Investment Advisers Act of Financial Planning Service For certain plan clients and certain IRA account holders, AAG will provide individualized financial planning services to the participant/account holder. The participant/account holder is required to complete a comprehensive financial assessment. Based on the information provided by the participant/account holder and/or the Plan Sponsor, AAG with the assistance of third party financial planning software will provide the participant/account holder with a customized, comprehensive financial needs assessment. AAG s financial planning service is limited to providing the participant/account holder with a needs assessment; AAG will not market or provide advice on any product or service identified in the needs assessment other than AAG s Services. The information provided to the participant/account holder under this service is through a contractual arrangement with an unaffiliated third party vendor(s). In certain circumstances the vendor s financial planning tools may recommend the purchase of life insurance products; such recommendations are not specific to any insurance underwriter and do not constitute an offer to solicit or sale insurance products offered by AAG s affiliated insurance companies, including without limitation Great-West Life & Annuity Insurance Company ( Great-West ) and Great-West Life & Annuity Insurance Company of New York (GWL&ANY ). 6. Retirement Income Projection Tools and Services AAG may offer online tools and services for participants/account holders to translate projected or actual retirement savings into estimated monthly retirement income. This interactive retirement planning service consists of various retirement income projection tools. These tools are informational in nature and do not reflect actual investment results and are not guarantees of future results; these tools do not constitute investment advice under the Investment Advisers Act of Enrollment in AAG s Services For Retirement Plan Participants: Plan providers and plan sponsors select the Service(s), i.e., Online Investment Guidance, Online Investment Advice and/or the Managed Account service that are made available to plan participants and also the manner by which participants can authorize the Service(s). Participants must agree to the terms of a user agreement ( Terms of Service ), which terms may be amended by AAG from time to time, to use any of the Services. As part of a participant s enrollment in the Managed Account service, the participant receives a Managed Account Welcome Kit shortly after enrollment. The participant additionally receives an Annual Kit, each year. Each kit provides the participant an update on their account and information on reaching their retirement goals. In certain instances, Plan Sponsors may authorize AAG to enroll participants automatically in the Managed Account service based on information provided to AAG by the Plan Sponsors. In such instances, current participants in the Plan receive the Terms of Service and are given a defined period of time in which to cancel or opt-out of the Managed Account service without incurring an advisory fee (the Free Look Period or Promotional Period ). Participants automatic enrollment in the Service by the Plan Sponsors is based upon minimum personal financial information provided by the Plan Sponsor, including date of birth, salary, gender and state of residence. Participants are able to review this information either online or by contacting an AAG representative; participants are solely responsible for reviewing the personal financial information they or their Plan Sponsor provide and for notifying AAG of any changes or updates to such information. Participants who are subsequently eligible for their employer-sponsored retirement plan or that otherwise elect to opt-in after the Free 6

47 Look or Promotional Period concludes may not be eligible for a waiver of advisory fees otherwise available in the Free Look or Promotional Period. For Empower Retirement IRA Account Holders: The services are available to all account holders of the Empower Retirement IRA. Account holders must agree to the terms of a user agreement ( Terms of Service ) prior to using any of the online services, which terms may be amended by AAG from time to time. The advice and recommendations provided through the Services discussed in this Brochure are based on the responses or other information provided by or about the participant/account holder by the Plan Sponsor and/or the participant/account holder. Neither AAG nor Morningstar Investment Management make any guarantees or warranties, express or implied, as to the accuracy, timeliness, or completeness of such information. The Services are also subject to the general market and financial conditions existing at the time of such usage. The retirement goal forecast and investment advice recommendations are not a guarantee of future results and are not a guarantee that a particular person will achieve their retirement goals. Termination of Services Participants/account holders may cancel their participation in the Online Investment Advice service or the Managed Account service at any time. Participants/account holders utilizing the Online Investment Advice service must complete their cancellation online. Participants/account holders utilizing the Managed Account service may either cancel online or by calling AAG at the toll-free customer service number. After cancellation of the: 1. Online Investment Advice service, the individual will no longer have access to the online investment recommendations. Because AAG does not effect changes to the participant s/account holder s asset allocation and account balances, the individual s balances will not be affected unless and until the individual affirmatively changes their asset allocation and balance after the cancellation of the Online Investment Advice service. 2. Managed Account service, the participant/account holder will have the ability to make allocation and investment option changes to their account, usually by the next business day markets are open following cancellation of the Managed Account service. Accordingly, the participant s asset allocation will remain the same as established in the Managed Account service unless and until the participant affirmatively changes his/her asset allocation after cancellation of the Managed Account service. Participant/Account Holder Information The use and storage of any information, including, without limitation, an individual s personal and non-public information, account number, password, identification, portfolio information, account balances and any other information available on an individual s personal computer, is provided at the individual s sole risk and responsibility. The individual is responsible for providing and maintaining the communications equipment (including personal computers and modems) and telephone or options services required for accessing and using electronic or automated services, and for all communications service fees and charges incurred by the individual in accessing these services. AAG shall not bear any responsibility for either errors or failures caused by the malfunction of any computer or communication systems or any computer viruses or related problems that may be associated with the use of the Services. Assets Under Management With respect to the services described in this Brochure, as of December 31, 2016: - Discretionary investment management among all services (including the Managed Account service described herein) in the amount of: $25,134,066,979 - Non-discretionary investment advisory services among all services (including the Online Investment Advice service described herein) in the amount of: $1,004,147,539 - Total discretionary and non-discretionary investment management and advisory services in the amount of: $26,138,214,518 Item 5 Fees and Compensation For employer-sponsored retirement plans, fees are subject to negotiation by the Plan sponsor which may include Plan-level pricing credits depending on the various option(s) selected by the Plan for its participants. In some instances, if agreed to by the Plan, the Plan sponsors or recordkeeper may pay AAG s fees on behalf of Plan participants. AAG reserves the right to offer discounted fees or other promotional pricing or to waive fees for any particular period of time subject to proper notification and disclosure. 1. Online Investment Guidance Service Fees There is generally no fee for participants using the Online Investment Guidance service, however, participants may be assessed a fee for the Online Investment Guidance service depending on AAG s agreement with the Plan sponsor. IRA account holders do not pay a fee for use of the Online Investment Guidance service. 7

48 2. Online Investment Advice Service Fees Participants who use the Online Investment Advice service may be charged a flat fee. Alternatively, this fee may be paid by the plan or Plan sponsor. The fee for the Online Investment Advice service is generally $25.00 per year, or $6.25 per quarter, as specified in the participant s Terms of Service and/or the plan sponsor s Investment Advisory and Management Service Agreement. Fees may be debited on a quarterly or monthly basis from participants accounts based on the terms of service agreed upon by the Plan sponsor. If the participant s Plan sponsor or plan terminates the Great-West service agreement with the plan s recordkeeping service provider, the fees are debited through the date of such termination. Use of the Online Investment Advice service by a participant at any time during the applicable billing period will result in the participant s account being debited based on the entire fee or the Plan sponsor incurring the entire fee on behalf of the participant. Unless a participant affirmatively terminates the Online Investment Advice service, or the Plan sponsor terminates its service agreement with Great-West, the fee will be assessed each year following the participant s initial use. The $25.00 annual service fee pricing is unaffected by participants frequency of use. Empower Retirement IRA account holders who use the Online Investment Advice service are charged an annual flat fee of $25.00, debited quarterly at $6.25 per quarter. Fees are debited from IRA account holders accounts on a quarterly or monthly basis based on the terms of service agreed upon by the account holder. If the IRA account holder terminates his/her Empower Retirement IRA, the fees are debited at the end of the billing cycle when the termination occurred. Use of the Online Investment Advice service by an account holder at any time during a quarter will result in the account holder s account being debited the applicable fee. 3. Managed Account Service Fees For Employer-Sponsored Retirement Plan Participants: Participants may be charged a fee for the Managed Account service based on the Terms of Service with the participant and/or the Plan Sponsor s Investment Advisory and Management Service Agreement. AAG may offer Plans tiered pricing schedules based on the methodology the Plan determines to use for offering or enrolling its participants in the Managed Account service. Such options include, but are not limited to, pricing schedules based on the Plan sponsor s selection of an opt-out versus opt-in enrollment methodology. Pricing schedules, as applicable, for each of the options are made available to the Plan sponsors for which they may use to select the option for their employer-sponsored retirement plan. Pursuant to the Terms of Service and/or the Plan Sponsor s Investment Advisory and Management Service Agreement, the fee for the Managed Account service is based upon a percentage of assets managed. The fee, as applicable, for the Managed Account service varies and is fully disclosed to participants prior to or at the time of enrollment in the enrollment disclosure materials provided to participants. In addition, the fee is disclosed to participants in the Terms of Service at the time the participant enrolls in the Managed Account service. The maximum annualized fee that may be charged to a participant is 0.90% of the participant s account balance. The advisory fee is debited from the participant s account following each applicable billing period, which is generally quarterly. If a participant cancels participation in the Managed Account service at any time within a given billing period, pursuant to the participant s Terms of Service and/or the Plan sponsor s Investment Advisory and Management Service Agreement, the participant s fee is based upon a percentage of assets managed and will be debited from the participant s account or paid by the plan sponsor according to AAG s agreement and procedures. If the participant s Plan sponsor or Plan terminates its service agreement with the plan s recordkeeping service provider, the participant s advisory fee is debited as of such date of termination or paid by the plan sponsor according to AAG s agreement and procedures. For Empower Retirement IRA Account Holders: IRA account holders are charged a quarterly fee for the Managed Account service based upon a percentage of assets managed: Principal Account Balance Quarterly Fee Annualized Quarterly Fee < $100, % 0.55% Next $150, % 0.45% Next $150, % 0.35% > $400, % 0.25% AAG reserves the right to offer current and new or prospective IRA account holders discounted fees or other promotional pricing or to waive fees for any particular period of time subject to proper notification and disclosure. The advisory fee is debited from the account holder following each applicable billing cycle. If an account holder cancels their participation in the Managed Account service or Empower Retirement IRA at any time within a given fee cycle, the fee is based upon a percentage of assets managed and will be debited from the account according to AAG procedures. 8

49 4. Financial Planning Service Fees Fees charged for financial planning services are negotiated on a plan-by-plan basis. In some instances the participant or account holder is assessed a fee for the financial planning services and in other instances, a Plan sponsor may pay the fee on behalf of participants who use this service. Not all plans or IRAs are eligible to offer this service. 5. Retirement Income Projection Tools and Services AAG does not charge a fee to Plan sponsors, participants or IRA account holders for the retirement income projection tools and services. 6. Other Fees and Expenses In addition to any previously negotiated and disclosed recordkeeper fees, commission payments and other administrative servicing fees and expenses for each plan, AAG may pay cash compensation or referral fees to broker-dealer firms that are not affiliated with AAG for soliciting and referring plan sponsors and their participants to enroll in AAG s Managed Account service. Such compensation for referrals and solicitation activities may result in a higher fee of the total assets under management for a plan to be charged to participants based on the total assets in the Managed Account service, in addition to the advisory fee for the Managed Account service. AAG s fees do not include the fees and expenses charged by the investment options, including redemption fees. Redemption fees vary in amount and application by each applicable Core Investment Option. It is possible that transactions initiated by AAG in the Managed Account service may result in the imposition of a redemption fee on one or more investment options available in a plan. Additionally, any action undertaken by an individual who implements recommendations from the Online Investment Advice or uses information provided through the Online Investment Guidance service may result in redemptions or other transaction fees. Any fees are deducted from the individual s account balance. All securities transactions which occur as a result of the services provided by AAG as described in this Brochure are executed by GWFS for which GWFS may receive compensation in the form of 12b-1 fees or other compensation from mutual fund companies or from the other investments available under the plan or available through the Empower IRA. A participant will pay advisory fees to AAG for Managed Account Services and to GWCM if Great-West Funds are included in the retirement plan investment options. The fees paid to GWCM for management of the Great-West Funds are included in the fund share price. Item 6 Performance-Based Fees and Side by Side Management AAG does not charge any performance based or side-by side management fees. Item 7 Types of Clients AAG offers investment advisory and management services to plan sponsors of employer-sponsored retirement plans; such as 401(a), 401(k), 403(b) and 457 plans, including government entities and their participants through arrangements with the plan s recordkeeper and to account holders of the Empower Retirement IRA. Item 8 Methods of Analysis and Investment Strategies The Services described in this Brochure are based on the proprietary asset allocation and retirement income projection methodologies developed by Morningstar Investment Management. The development of investment advice by Morningstar Investment Management involves the investment methodologies across the products and services described herein. Morningstar Investment Management or its affiliates focus on specific investment areas such as capital market assumptions and methodologies used for asset allocation, manager selection, portfolio construction, and advice. Analysis Methods In providing advisory services, Morningstar Investment Management reviews available quantitative data to analyze and screen the investment options within a plan. They may also apply qualitative analysis by investment professionals, such as evaluations of investment managers, portfolios and individual investments. The primary sources of information used are the extensive databases and methodologies of Morningstar Investment Management or its affiliates, and interviews with investment managers. Other sources include financial publications, annual reports, prospectuses, press releases, and filings with the SEC. Morningstar Investment Management combines this information with other factors including actuarial data, stock market exposure, probability analysis, and mean-variance optimization into a proprietary software program to analyze a complex set of market data and variables. The result is an advanced model that can provide investment recommendations and a projection of different outcomes. Using this model, Morningstar Investment Management develops an investment strategy tailored to your investment goals, as described below. Investment Strategy If you are accumulating for retirement savings, the investment strategy is generally based on information such as managed account balance, expected retirement age, contribution rate and other preferences provided by the individual. If the individual has already retired, and if the plan provider offers a guaranteed lifetime withdrawal benefit program, the strategy is based on information such as the current account balance, additional cash flows and life expectancy. This retirement strategy may include some or all of the following: Retirement Income Goal (accumulation phase): Morningstar Investment Management defines the retirement income goal as the projected amount of money that will be needed by the individual throughout retirement. This calculation is based on current income, adjusted to reflect the estimated dollar value at retirement age. Typically, Morningstar Investment Management uses an amount equal to 100% of take- 9

50 home pay (although some plan providers may request a different rate, e.g., 80% of gross pay), and then project the value of that amount at retirement age to determine a retirement income goal. The individual has the option to change this projected retirement income amount. Income Outlook (accumulation phase): Morningstar Investment Management defines the income outlook as a projection of the annual income that the individual may receive during retirement. This is based on an annualized view of the investment wealth accumulated, combined with social security benefits and any pension or other income provided to AAG. Total Retirement Income (in-retirement phase): If your plan provider or Plan Sponsor offers the in-retirement services, Morningstar Investment Management defines total retirement income as the projected amount of money, typically at some level of probability that one can expect to receive on an annual basis in order to maintain income throughout retirement. IMPORTANT: When Morningstar Investment Management determines the income projections described above, these projections are based on hypothetical performance data and do not represent actual or guaranteed results. Your projections may vary over time with each additional use of the service. Risk Strategy Morningstar Investment Management determines a risk strategy based on several factors, such as current age and time until retirement, gender, salary, total current wealth, deferral rate, and retirement goals. If the individual has retired or is approaching retirement, and if they have the opportunity to purchase an annuity, the risk strategy also considers longevity and liquidity needs. The risk level corresponds to an asset mix, or the combination of stocks, bonds and cash alternatives, that will serve as the basis for the recommendations of specific funds appropriate for the individual. Estimated Tax Morningstar Investment Management estimates federal, state income, and capital gains taxes based on marginal tax rate calculations (the marginal tax rate is the rate one pays on the taxable income that falls into the highest bracket one reaches). These calculations are used when Morningstar Investment Management conducts income simulations. Tax data is updated annually based on United States Internal Revenue Code (IRC) and similar state tax data. Morningstar Investment Management uses income data for the individual, as well as their spouse/partner, to estimate federal and state tax exposure. The tax exposure is appropriately reduced for pre-tax deferrals, tax-deferred capital gains, and yield and distribution of Roth proceeds. Based on the information that the individual provides, Morningstar Investment Management provides an estimate of the tax exposure, but may not include all tax considerations. Please consult a tax adviser for a complete understanding of your tax situation. General Risks of Investing Investment Risks It is important to note that all investments involve risk and will not always be profitable. Neither AAG nor Morningstar Investment Management or their affiliates guarantees that the recommendations will result in achieving the retirement income goal. Neither AAG nor Morningstar Investment Management or their affiliates can guarantee that negative returns can or will be avoided in any of the recommendations. An investment s future performance may differ substantially from its historical performance and as a result, may incur a loss. Past performance is no guarantee of future results. Additionally, the plan provider, Plan Sponsor or AAG may make changes from time to time with regard to the investment options available within a plan. Market Risk Risks associated with the investment options can vary significantly with each particular investment category and the relative risks of such investment categories may change. Stock and bond markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments in the U.S. and in other countries. Past performance and historical returns used to select particular investment(s) are no guarantee of future performance. Current performance may be lower or higher due to market volatility. Methodology Risk The Services and the retirement income projection tools are based on the proprietary asset allocation and monthly retirement income projection methodologies developed by Morningstar Investment Management. Risks associated with Morningstar Investment Management s methodologies vary based on the assumptions used by Morningstar Investment Management to project inflation over time, significant and adverse economic conditions, the availability and amount of Social Security and other retiree benefits, and other factors. Asset Allocation Risk Market returns and performance depends on determining the strategic asset class allocations, the mix of underlying investment options, as well as the performance of those underlying investment options. The investment options' performance may be lower than the performance of the asset class that they were selected to represent. Stocks and bonds can decline due to adverse issuer, market, regulatory, or economic developments. International markets may be less liquid and can be more volatile than U.S. markets. These risk factors, including those associated with currency exchange rates, also apply to investments in international markets, all of which may make international markets more volatile and less liquid than investments in domestic markets. Some of the investment options can invest in either high-yield securities or small/emerging growth companies. Investments in these types of securities generally are subject to greater volatility than either highergrade securities or more-established companies, respectively. These risks may increase share price volatility. 10

51 Item 9 Disciplinary Information Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of AAG or the integrity of AAG s management. AAG has no legal or disciplinary event to report relative to this Item. Item 10 - Other Financial Industry Activities and Affiliations Other Financial Industry Affiliations AAG has arrangements that are material to its advisory business or its clients/participants/account holders with the related entities shown below. These related entities may receive certain fees that are unrelated to AAG s fees for its Services. Insurance Companies Great-West Life & Annuity Insurance Company is an insurance company domiciled in the State of Colorado ( Great-West ). AAG is a whollyowned direct subsidiary of Great-West. Great-West, pursuant to a various agreements, may provide investment products, recordkeeping and other administrative services through its affiliates, FASCore, LLC ( FASCore ), Great-West Financial Retirement Plan Services, LLC ( Great-West RPS ). Great-West Life & Annuity Insurance Company of New York is an insurance company domiciled in the State of New York ( GWL&ANY ). AAG is an affiliate of GWL&ANY through common ownership in which Great-West is the sole owner of both AAG and GWL&ANY. GWL&ANY, pursuant to a various agreements, may provide investment products and administrative services through its affiliates, FASCore and Great-West RPS, to retirement plans for which AAG may also provide its services. Broker-Dealer GWFS Equities, Inc. ( GWFS ), an affiliate of AAG, is a registered limited broker/dealer and wholly-owned subsidiary of Great-West through which trades are executed. GWFS may provide wholesaling, direct sales, enrollment and/or communication services to retirement plans and their participants for which AAG may also provide its services. All transactions which occur as a result of participation in the Managed Accounts service are executed by GWFS for which GWFS may receive compensation in the form of 12b-1 fees or other compensation from the mutual fund companies or from the other investments that may be available as investment options. Trust Company Great-West Trust Company, LLC ( GWTC ) is a trust company and affiliate of AAG. GWTC is a wholly-owned subsidiary of Great-West. GWTC is chartered under the laws of the State of Colorado. GWTC may provide discretionary or directed trustee and/or custodial services for AAG s clients. GWTC also serves as the trustee for certain collective investment trusts which may be available as investment options and is the custodian of all Empower Retirement IRA accounts. Emjay Trust Company ( Emjay ) is a company with trust authority under Wisconsin law, and an affiliate of AAG. Emjay is a wholly-owned subsidiary of Great-West. Emjay may provide directed trustee, custodial, and recordkeeping services for AAG s clients. Investment Company Great-West Funds, Inc. is an investment company registered under the Investment Company Act of 1940 and affiliated with AAG. Great- West Funds may provide investment products to retirement plans for which AAG may also provide its services. Great-West Funds is managed by Great-West Capital Management, LLC as discussed below. Shares of Great-West Funds may be available for purchase by retirement plans advised by AAG or to account holders of the Empower Retirement IRA. Investment Advisers Great-West Capital Management, LLC ( GWCM ), an affiliate of AAG, is an investment adviser for Great-West Funds and is registered under the Investment Advisers Act of It is a wholly-owned subsidiary of Great-West. AAG provides managed account, guidance, and advice services to participants in certain defined contribution plans and to account holders of the Empower Retirement IRA which may have as investment options certain portfolios of Great-West Funds managed by GWCM. Pursuant to an administrative services agreement between AAG and GWCM, AAG personnel assist GWCM with respect to preparing certain reports that are presented by GWCM to GWCM s Managers as well as the Board of Directors for Great-West Funds. Putnam Investment Management, LLC is a registered investment adviser ( PIM ). AAG is under common control with PIM and is an affiliate of PIM. Shares of Putnam mutual funds managed by PIM may be available for purchase by retirement plans or by account holders of the Empower Retirement IRA who invest in the Portfolios of the Great-West Funds or underlying funds managed by PIM. PIM also serves as the sub-adviser to the Great-West Putnam High Yield Bond Fund and the Great-West Putnam Equity Income Fund; both Funds under investment management with GWCM. Irish Life Investment Management, Limited a Dublin, Ireland based, SEC registered investment adviser. ILIM is part of the Great-West Lifeco, Inc. ( GWL ) group of companies; GWL has operations in Canada, the United States, Europe and Asia through ownership of various companies including Great-West and PIM. The Adviser is a wholly-owned subsidiary of Great-West which in turn is an indirect, wholly owned subsidiary of GWL which controls ILIM. ILIM manages the index series of GW Funds. The affiliated companies of AAG, GWCM, GWFS, Great-West, GWL&ANY, Great-West Funds, FASCore, Great-West RPS, and GWTC operate under the multiple brands of Great-West Financial, Great West Investments, Empower Retirement and Empower Institutional depending upon the products, services and retirement markets involved. These brands do not materially affect the internal structure of AAG or AAG s corporate ownership. 11

52 Potential Conflicts of Interest The investment options available in the Managed Account service are generally established by the Plan sponsor/client for which AAG provides its Services or by the institutional partner through which our Services are delivered. In some cases, the investment options may include or be comprised solely of affiliated investment options of AAG. Participation in the Managed Account service may result in an allocation to one or more investment options managed by an affiliate of AAG. AAG does not receive compensation from its parent company or any of its affiliates as a result of these allocations. AAG does not view these relationships as conflicts because the sub-adviser remains independent from AAG and its related persons with respect to their methods of analysis, investment strategies and advice provided. A participant will pay advisory fees to AAG for Managed Account Services and to GWCM if Great-West Funds are included in the retirement plan investment options. The fees paid to GWCM for management of the Great-West Funds are included in the fund share price. For employer-sponsored retirement plans, registered representatives of GWFS Equities may offer plan-directed investment options managed by an affiliate of AAG ( Directed Options ) or insurance products of Great-West or GWL&ANY ( Insurance Products ), at the request of the plan sponsor, to AAG s advisory clients. Directed Options are selected solely by the plan or plan sponsor and treated as directed assets of the plan. In addition, AAG does not receive compensation from its parent company or any of its affiliates in connection with the solicitation or offering of Insurance Products or Directed Options to AAG s advisory clients. Other Business Activities Certain senior managers and officers of AAG may also serve as executive officers of AAG s parent company, Great-West and other affiliates of AAG. Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading AAG s Code of Ethics AAG has adopted a written Code of Ethics (the Code ) in compliance with Rule 204A-1 of the Investment Advisers Act of 1940 ( Advisers Act ). The Code sets forth standards of business conduct expected of advisory personnel and require AAG s advisory personnel, referred to as Supervised Persons and, in some cases, as Access Persons." Access Persons are required to report their personal securities holdings and transactions in accordance with the Advisers Act. AAG s Supervised Persons are required to comply with AAG s Code of Ethics. A copy of the Code will be provided to current or prospective clients, upon request. AAG s Code includes but is not limited to such topics as: Fiduciary responsibility to clients; Compliance with federal securities laws; Protection and safeguarding of confidential information; Giving and receiving gift, gratuities and entertainment; Reporting and monitoring personal securities transactions; Avoiding and disclosing conflicts of interest, and; Reporting violations of the Code. Personal Trading AAG s Code requires pre-clearance of certain securities transactions. Officers, managers, and certain employees of AAG (collectively, Access Persons ) may trade for their own personal accounts in securities which are recommended to and/or purchased for AAG s advisory clients. However, because the Code would permit Access Persons to invest in the same securities as clients in some circumstances, there is a possibility that employees could benefit from market activity by a client in a security held by an Access Person. As a result, trading is continually monitored in accordance with the Code and federal securities laws. AAG s Code is intended to ensure that the personal securities transactions and the outside business activities of AAG s Access Persons do not interfere with making decisions in the best interest of advisory clients. Principal Trading AAG has adopted a policy and practice not to engage in any principal transactions. AAG holds no investments for its own accounts which could be bought from, or sold to, an advisory client. In the event of any change in AAG s policy, any such change must be approved by management and any principal transactions would only be permitted after meeting the review and approval requirements described under the anti-fraud section of the Advisers Act. Participation or Interest in Client Transactions Affiliate GWFS Effects Securities Transactions for Advisory Clients Registered representatives of GWFS may provide wholesaling, direct sales, enrollment and/or communication services to retirement plans and their participants or account holders for which AAG may also provide its services. For this service, GWFS may receive fees either from the plan or from the investment provider (fund families). Participants/account holders in the Online Investment Advice or the Managed Account services may have allocations in the investment options that result in GWFS receiving compensation from the investment options. Allocations in the investment options are solely determined and based on Morningstar Investment Management s software not 12

53 determinations made by AAG. The compensation paid by AAG to Morningstar Investment Management for Morningstar Investment Management s proprietary software advice program does not vary based on the allocations made or recommended by Morningstar Investment Management. Because Morningstar Investment Management is unaffiliated with AAG and GWFS, AAG does not believe there is a conflict of interest. All securities transactions which occur as a result of the services provided by AAG as described in this Brochure are executed by GWFS for which it may receive compensation in the form of 12b-1 fees or other compensation from mutual fund companies or from the other investments that may be available as investment options. However, in all instances, AAG s affiliation with GWFS is disclosed. Affiliate Great-West or GWL&ANY Proprietary Investments Investment options into which participant assets may be allocated, pursuant to the Online Investment Advice or the Managed Account services may be through a fixed and variable deferred annuity issued by Great-West or GWL&ANY. Because Morningstar Investment Management is unaffiliated with AAG, Great-West, GWL&ANY and their affiliates, AAG does not believe there is a conflict of interest. However, in all instances, AAG s affiliation with Great-West and/or Great-West s affiliates, as applicable, will be disclosed. Item 12 Brokerage Practices Brokerage Selection; Best Execution For self-directed retirement plans or self-directed IRAs, the plan sponsor or its agent selects the broker-dealer used by the retirement plan and determines the reasonableness of the compensation. AAG does not select or recommend broker-dealers for stock transactions or selfdirected brokerage accounts and does not determine the reasonableness of broker-dealer s compensation. Transactions recommended by the independent financial experts for the Managed Account Services are processed by our recordkeeper, Empower Retirement ( Empower ), and generally executed through GWFS. Soft Dollar Practices AAG, as a matter of policy, does not utilize research, or other products or services from third parties in connection with client securities transactions on a soft-dollar commission basis. Directed Brokerage The plan sponsor may elect to offer brokerage services to participants in the retirement plan. AAG does not participate in such decisions and does not provide recommended portfolios or investment recommendations on assets held in a brokerage account under the retirement plan. Trade Aggregation AAG does not bunch orders or engage in block trades to execute equity orders for clients as client accounts, generally, are held in trust per regulatory requirements. Further, most trades are mutual funds where trade aggregation does provide any additional client benefits. Item 13 Review of Accounts Account Reviews Neither AAG nor Morningstar Investment Management review the personal financial information of participants/account holders as provided by the participant/account holder or the Plan Sponsor and do not assume responsibility for any incomplete or erroneous information. Such information, which includes date of birth, salary, gender and/or state of residence, must be reviewed periodically by the participant and/or the Plan Sponsor or the account holder who in turn are responsible for notifying AAG of any changes, errors or omissions to such information. AAG conducts the following review of its clients accounts: Online Investment Guidance Service AAG does not conduct any review or other oversight for participants/account holders enrolled in this service. Online Investment Advice Service AAG does not conduct review of its participant s/account holder s accounts in respect to investment oversight, monitoring, or rebalancing. Participants/account holders receive from AAG investment recommendations based on the investment options as provided in their specific retirement plan or in the Empower Retirement IRA. Participants/account holders are responsible for self-directing their investments and determining whether the recommendations are suitable for their particular investment needs. Managed Account Service Under the Managed Account service, participant/account holder assets in the investment options are monitored, rebalanced and reallocated on a periodic (approximately quarterly) basis by AAG, based on Morningstar Investment Management s software program. On an annual basis, based on the individual s birth date, those enrolled in the Managed Account service will receive an Annual Kit containing an account update and forecast statement. Morningstar Investment Management updates their capital market assumptions underlying their methodology used to construct the asset classes, on at least an annual basis and then makes changes to the portfolio allocations, as necessary based on updated assumptions. The portfolios are also monitored on a regular basis on current portfolio allocations and adjustments are made as necessary. 13

54 Financial Planning Service AAG does not verify or review the information provided by the individual and/or the Plan Sponsor which is used to provide the individual with the financial needs assessment. The individual and/or Plan Sponsor is responsible for providing accurate and comprehensive information and the individual is responsible for reviewing their personal financial circumstances and updating their information with any material changes. Spend-Down Advice and Retirement Income Projection Tools AAG does not conduct any review or other oversight for participants/account holders or Plan sponsors who utilize these tools or services. They receive access to AAG s various online tools, including account planning and analytical tools, and the participant/account holder is responsible for selecting their own asset classes and building a diversified portfolio based on their own self-direction using this service Personnel of AAG, at least annually, review the methodologies used by Morningstar Investment Management to power the Online Investment Guidance, Online Investment Advice and Managed Account services to ensure that they are consistent with investment advisory best practices, current technology, applicable law and the terms of the agreement between AAG and Morningstar Investment Management. Reporting to Clients Participants/account holders enrolled in the Managed Account service receive a Managed Account Welcome Kit shortly after enrollment, an account update at least annually, and a forecast statement annually. Participants/account holders enrolled in the Online Investment Advice Service can review their accounts and generate their own reports at any time. Individuals are encouraged to update their personal information or make changes to investment options online or via the appropriate toll-free customer service number at any time should a significant change occur in their personal circumstances. In addition, all individuals receiving Services are provided quarterly account statement generated by the plan s recordkeeper. AAG communicates regularly, either orally or in writing, with plans and/or plan sponsors to report participant utilization of the services. AAG also provides for plan sponsors periodic reports and performance information such as the Fund Performance Review ( FPR ), which includes information about a client s investment options, fund list, portfolio holdings and asset allocation strategy, among other things, as applicable. The nature and frequency of other communications with plan sponsors depends on the terms of the agreement between AAG and the plan or plan sponsor. AAG also communicates with plan sponsors upon their request. Item 14 Client Referrals and Other Compensation AAG does not pay cash or other compensation to outside solicitors for referrals to the Empower Retirement IRA. AAG may pay cash compensation or referral fees to broker-dealer firms that are not affiliated with AAG for soliciting and referring plan sponsors and their participants to enroll in AAG s Services. Such compensation for referrals may result in a higher fee, in addition to the advisory fee, being charged to participants based on the total assets in the Managed Account Service. Any compensation paid by AAG for solicitation activities is pursuant to a written agreement and is paid in compliance with Rule 206(4)-3 of the Advisers Act. Some affiliated employees will have an opportunity to earn bonus compensation, in addition to their salary, for communication, education and /or assisting participants to enroll in AAG s Services. Such bonus compensation does not increase the fees paid by the plan and/or their participants. Item 15 - Custody AAG does not maintain actual custody of its clients cash, bank accounts, or securities. Pursuant to Rule 206(4)-2 of the Advisers Act as amended, AAG is deemed to have constructive custody with respect to certain client funds and securities because an affiliated party is the custodian and directed or discretionary trustee of certain retirement plan accounts. In addition to annual audits, these accounts, except for Emjay, are subject to surprise verifications by an independent public accountant each year, as required by Rule 206(4)-2. If applicable, AAG s clients receive periodic account statements (at least quarterly) from their custodian. Certain clients may have assets held by unaffiliated custodians. Item 16 Investment Discretion AAG provides investment discretion for those Plan participants/account holders who enroll and participate in AAG s Managed Account service; AAG does not offer or engage in discretionary investment services for either the Online Investment Guidance or Online Investment Advice services. For more information on these programs, please refer to Item 4 Advisory Business in this Brochure. AAG s Managed Account service is a professional, flexible asset management program based on data resulting from the methodologies and proprietary software program developed and employed by its IFE, Morningstar Investment Management. To provide the Managed Account service to Plan participants and IRA account holders, AAG retains discretionary authority over the allocation of available investment options without requiring prior approval of each transaction. All ongoing investment transfers and investment direction changes are implemented for Plan participants enrolled in the Managed Account service. For more information on AAG s discretionary review of clients accounts, please refer to Item 13 Review of Accounts. 14

55 Item 17 Voting Client Securities AAG, as a registered investment adviser, and as a matter of practice, does not accept authority to vote client securities in connection with any of the services described in this Brochure. Item 18 Financial Information As previously discussed, under certain circumstances AAG has discretionary authority over certain client funds and securities. Accordingly, AAG is required to disclose information about AAG s financial condition that is reasonably likely to impair AAG s ability to meet contractual commitments to its clients. AAG has no financial commitment that impairs its ability to meet contractual commitments to its clients, nor has AAG been the subject of a bankruptcy proceeding. Further, AAG does not require or solicit prepayment of fees in excess of $1,200 per client more than six months in advance. Not an Offer to Purchase or Sell Securities. This information contained in this Brochure, including for example information regarding the Great-West Funds, is for disclosure and other informational purposes only and is not an offer to sell or a solicitation of an offer to buy any securities, and may not be relied upon in connection with the purchase or sale of any security. 15

56 Form ADV Part 2B Brochure Supplement ADVISED ASSETS GROUP, LLC 8515 East Orchard Road Greenwood Village, CO Telephone for Participants in Employer-Sponsored Retirement Plans: Telephone for Account Holders of the Empower Retirement IRA: Facsimile: Website: advisedassetsgroup.com August 28, 2017 This brochure supplement provides information about AAG s supervised persons that supplements the AAG Disclosure Brochure. You should have received a copy of that brochure. Please contact the appropriate number above if you did not receive AAG s brochure or if you have any questions about the contents of this supplement. Additional information about the supervised persons in this supplement is available on SEC s website at Additional information about AAG is also available on the SEC s website provided above. Information on the following supervised persons of AAG is included in this Brochure supplement: Diane Minardi Stone Bill Thornton Michael Burroughs Valerie Baker Thomas Freund AAG is a registered investment adviser. Registration does not imply any level of skill or training. The oral and written communications from AAG provide you with information for you to determine to hire or retain AAG. 16