Comprehensive plan services with an eye toward tomorrow

Comprehensive plan services with an eye toward tomorrow Schwab Retirement Plan Services, Inc.

Always put the client first. No matter what. Charles Schwab Our culture of service At Schwab Retirement Plan Services, we look at retirement planning and plan administration through the eyes of our clients, and that perspective drives the continuous development of products and services aimed at creating better outcomes for investors. This is how we help plan sponsors and participants take ownership of saving for their retirement. We re tireless advocates for plan participants and those who serve them. Since day one, Charles Schwab has challenged the status quo, looking for ways to offer clients more value and a better experience. Through more than 40 years of helping individual investors reach their goals, we ve seen how the power of investing has the ability to transform lives. We believe that when clients actively and consistently engage with their investments, they can truly effect positive change in their financial futures. At Schwab Retirement Plan Services, we also believe that what we do every day makes a real difference. We re committed to championing our clients goals and doing what we feel best serves our clients needs. From a wide range of investment choices to participant education to technology, the experience we deliver demonstrates our commitment to the industry and to supporting plan sponsors. And we re confident that our approach can help your participants improve their retirement outcomes. 1

A contemporary, comprehensive approach Retirement plan services designed to optimize outcomes Tailored Services Ongoing Support Valuable Insights Accountability We re about more than your plan. We re about you and your people. Whether your corporate retirement offer includes defined contribution, offer valuable insights intended to improve it. We provide consultation are easily accessible and committed to promptly responding to your needs. defined benefit, or nonqualified in ERISA compliance and plan When it comes to plan plans, Schwab Retirement Plan design, and can assist you in recordkeeping and administration, Services can help you consolidate implementing best practices. And our ongoing goal is to meet or oversight while working with you to we ll continue to assess ways to help exceed your expectations. We re design plans tailored to the unique you increase your plan s efficiency transparent in communicating to needs of your company. Our first over time. clients both their plan s and client objective is to fully comprehend your As a Schwab Retirement Plan team s performance so that we can business so that we can provide Services client, you ll receive continue to look at ways to improve information that helps you determine proactive and consultative support the services we provide. Our the features and services that make before, during, and after the Retirement Plan Scorecard is just the most sense for your plan. conversion process. The breadth and one of the ways we keep ourselves Understanding your plan in detail is also important. This helps us confer with you on its performance and depth of our service team enables it to provide quality assistance in all areas of your plan. Team members accountable to clients. Plan sponsors ranked Schwab Retirement Plan Services number one as a Thought Leader and among the top three as a New Product Innovator in the Boston Research Group 2015 Plan Sponsor DCP Survey. 1 2 3

A knowledgeable service team A disciplined approach to managing your plan strategy We offer insight and support in each area of your plan. Your team: Relationship Manager Oversees the entire relationship. Takes a proactive approach to your plan s success, and is accountable for making sure you receive the support you need. Conversion Manager Develops a project plan and leads a team of experts to work toward a smooth transition. Communication Consultant Collaborates with you to develop and manage an overall communication and education plan for your participants. Compliance Consultant Monitors and communicates the impact of regulatory and legislative changes, and serves as your dedicated ERISA* compliance team member. *Employee Retirement Income Security Act of 1974 As your plan evolves, so does our process. Refine plan Monitor progress Assess needs Implement plan Establish goals Develop plan Your team will provide an annual review of progress toward your goals, then work with you to adjust or reset them for the coming year. Your service team takes the time to understand your unique business. Then, using a structured and measurable process, we work with you to develop and implement a strategic plan designed to meet the needs of your company and participants. First, we conduct a thorough needs assessment to identify how your retirement plan ties into your overarching corporate objectives. Next, we help you determine the goals that you may wish to focus on in the coming year. We then go to work creating an action plan and assembling the tools and resources to implement it. We ll monitor your plan s progress and, based on the data we compile, continue to offer suggestions for refining your plan. All the while, we ll deliver proactive guidance and ongoing support. 4 5

Compliance and plan design consulting A deeper level of analysis for understanding plan health We ll help you make informed decisions about your plan. Customized benchmarking and analysis Schwab Retirement Plan Services creates complimentary benchmarking reports to help you understand how your organization s plan compares with those of your peers. We evaluate data from various internal and external sources to deliver relevant plan insights. We ll work with you and your plan consultant to provide best practices as well as actionable strategies designed to help you better manage your plan to its goals. Specialized plan design consulting We also provide meaningful recommendations designed to help improve your plan s overall design, performance, and competitiveness. We can analyze benefits and cost impacts of changes you may be considering to help you make fully informed decisions. When you re looking to add a new plan feature, for example, we ll make sure you understand the cost and testing implications that would impact your plan. Plan Analytics is a powerful tool for analyzing participant characteristics and identifying trends. With Plan Analytics your service team can help you explore: Median age, tenure, and savings rate Participants not contributing a sufficient percentage of pay to qualify for the employer match Participants, by age, in each target-date fund Retirement progress by participant population segment Participant contributions by type and source You can also: Quickly run what if scenarios using the tool s interactive displays Export information to Excel for further analysis Our ERISA compliance consultants monitor regulatory and legislative changes. Your ERISA Compliance Consultant will proactively analyze how any changes will impact your plan, then work with you to develop strategies for managing plan compliance. For illustrative purposes only. The data insights gained through Plan Analytics enable you to identify the unique needs of your participants in order to tailor messages to appropriate segments of your participant base. 6 7

A holistic experience for your participants Ours is not a one-sizefits-all approach It s an experience built on the understanding that each of your participants is an individual. Our participant experience fosters engagement through a deep focus on relationship, and we believe that one-on-one consultations help participants make more informed financial decisions. Because each person has unique needs, we take the time to understand what s going on in a participant s life. This approach helps us deliver a program that is relevant to each individual s life stage, personal situation, and understanding of money and retirement planning. When it comes to advice options, we believe that a managed account service is the optimal choice for moving participants toward better outcomes. Through this service, participants can take advantage of impartial third-party advice which considers factors like expected retirement age, savings rate, risk tolerance, and fundamental life situations. For six of the last seven years, Schwab Retirement Plan Services has ranked first in the Boston Research Group Participant DCP Survey 2 (a study of major recordkeepers participant satisfaction, needs, and attitudes). 8 9

A managed account service to help drive outcomes What a managed account service could mean for your participants Participants who use a managed account service receive a personalized saving and investment strategy based on their specific goals and circumstances. No two participants are the same, and our position is that professional management that incorporates multiple personal data points is the most effective advice approach. Through a managed account service, participants receive a personalized savings and investment strategy based on each individual s unique set of information. The data informs each participant s retirement savings goal, recommended contribution rate, and diversification of investments. Another advantage of the service is that it helps participants strategies evolve as their lives change. With ongoing professional With a managed account service, asset allocation is based on multiple participant data points: Age Account balance Salary Contribution rate Estimated Social Security benefits Employer contribution formulas Related retirement plans State of residence Marital status Gender management, a participant s allocation is reviewed periodically throughout the year and adjustments are made as needed. Participants may also choose to work with a dedicated advice consultant to provide additional retirement-related information and further refine their strategy. 40% 87% More Wealth in Retirement Participants who use a managed account service could end up with nearly 40% more income in retirement. 3 Increased Contribution Rates After receiving guidance with a managed account service, 87% of participants increased their contribution/savings rates. 4 Better Diversification Before using a managed account service, nearly half of plan participants held three or fewer funds. Afterward, the majority held six or more funds. 5 Staying the Course Participants with a managed account service maintained appropriate equity allocations through the ups and downs of the economic cycle. When the market went up, participants who were not using the managed account service did not increase their equity allocations accordingly, potentially missing out on market gains. 6 10 15 11

Resources and tools to help participants in all stages of life Services delivered the way your participants prefer Through multiple channels, participants can continue to work toward improving their retirement savings progress. Communications designed to engage Utilizing data-driven insights, our Technology that helps employees track retirement savings Financial education for retirement and beyond My Learning enables participants to Chat participant communications are designed to help you connect with My Retirement Progress 7 is a personalized snapshot of where a access retirement plan and financial education resources online and In person Apps your participants and help your participant is in saving for retirement. through our mobile app. It includes participants get the most out of Its calculations are based on a content relevant to plan features, their plan. number of demographic and financial financial wellness, investments, and inputs, including additional savings to participants nearing or in intended for retirement if the retirement. Participants can also use participant adds them. We show progress as a percentage: a it to access on-demand webcasts and register for live events. Online Videos participant s estimated monthly income, based on current contribution rate, divided by retirement income needed. For sponsors, My Learning makes it easy to see which content is most popular among participants as well as track other measures of engagement with the portal. It also enables sponsors to reward points for financial wellness initiatives. Mobile Webcasts 12 13

Adding value beyond your retirement plan To speak to a Schwab Retirement Plan Services representative, call 800-790-5561 or visit schwab.com/retirementplanservices. When you work with Schwab Retirement Plan Services, you ll gain access to additional Charles Schwab & Co., Inc. ( Schwab ) services designed to support your business and participants. Stock Plan Services Employee Monitoring Executive Services Schwab Stock Plan Services can help your stock plan become a key business tool that creates long-term value for your company and employees. A stock plan that incorporates strategic planning, a range of administrative options, innovative technology, participant education, and dedicated support can simplify plan management while helping to create more committed employees who feel confident about the decisions they are making for their financial futures. Schwab Stock Plan Services supports a range of equity types and offers you and your employees dedicated support to help you manage your plan more efficiently and help your participants make the most out of their equity compensation. Compliance Solutions offers a suite For your employees with more of tools that can help automate complex financial needs, Schwab common compliance tasks, such as Executive Services provides monitoring employee trades, tracking personalized advice and financial gifts and contributions, and planning. Through one-on-one managing affirmations and relationships, Executive Services disclosures. Through a Financial Consultants offer helpful comprehensive approach, guidance in areas such as nonqualified retirement plans, equity Compliance Solutions combines significant experience in employee compensation plans, alternative trade monitoring, deep knowledge of investments, insurance, and tax, the individual investor, and trust and estate planning. intelligent, modular technology. We work where you live. When your participants want help with needs outside of their retirement plan, they can visit one of more than 300 Schwab branches nationwide. Schwab offers assistance in areas such as college savings, retirement income planning, and developing an overall financial plan. Charles Schwab Bank is also available to serve your employees banking needs. 14 15

16 1 2015 Plan Sponsor DCP Survey conducted by Boston Research Group. Nationwide study of 1,340 401(k) plan sponsors with $5 million or more in plan assets, drawn from 401k Exchange database. Data collected April through November 2015. Ninety-eight identified themselves as having Schwab Retirement Plan Services, Inc. or Schwab Retirement Plan Services Company as their provider. 2 DCP 2015 Participant Survey conducted by Boston Research Group. Nationwide online study of 7,000 401(k) participants actively contributing to the plan. Data collected in May of 2015. 351 participants identified themselves as having Schwab Retirement Plan Services, Inc. or Schwab Retirement Plan Services Company as their provider. 2009-2014 DCP Participant Surveys conducted by Boston Research Group used similar methodology. 3 This figure represents the potential wealth increase an average 25-year-old could have at retirement when using a managed accounts service versus an average 25-year-old that did not use a managed accounts service. The analysis is based on 58,444 participants who used the Morningstar Retirement Manager SM service between January 2006 and February 2014. Participants are grouped by the age when they first implemented or received advice from Morningstar Retirement Manager and are assumed to have an initial retirement account value of $0 and a retirement age of 65. The results show that the average participant who first uses Morningstar Retirement Manager as a 25-year-old with a 0.4% annual fee could have 38.9% more than an average 25-year-old participant who did not use Morningstar Retirement Manager. Similarly, the average 45-year-old using Morningstar Retirement Manager with a 0.4% annual fee could have 23.3% more, and the average 55-year-old could have 13.8% more. The amount of additional retirement income attributed to the use of Morningstar Retirement Manager at retirement varies by age, and tends to decrease with the age the participant first uses the Morningstar Retirement Manager service. Additionally, the potential amount of additional retirement income increases as the management fee decreases; conversely, it decreases as the management fee increases. The average difference in the saving rate before and after using Morningstar Retirement Manager is calculated for each age group. The savings rate was applied to an assumed median income value for each age group. In a similar manner, the average difference in portfolio investment return before and after using Morningstar Retirement Manager was calculated for each age group. Six different annual fee levels (0.0%, 0.2%, 0.4%, 0.6%, 0.8%, and 1.0%) for the Morningstar Retirement Manager advice service were analyzed, and the fee was applied to the average portfolio balance for each age group on an annual basis. The final account value for each age group at retirement age was then compared for each annual fee level. This analysis does not account for all portfolio costs, such as fees, taxes, or expenses other than the annual account fee. If included, they would lower the potential amount of additional retirement income at retirement shown in this analysis. In no way should the results of this analysis be considered indicative or a guarantee of the future performance of an actual client using Morningstar Retirement Manager or considered indicative of the actual performance achieved by actual participants that have used Morningstar Retirement Manager. Actual results of participants that use Morningstar Retirement Manager may differ substantially from the results shown here and may include an individual participant incurring a loss. Morningstar Investment Management LLC does not guarantee that the results of their advice, recommendations, or the objectives of Morningstar Retirement Manager will be achieved. 4 The Impact of Expert Guidance on Participant Savings and Investment Behaviors, Working Paper (David Blanchett, August 2014). The percentage of participants that increased their savings deferral rates is determined by comparing each participant s savings deferral rate prior to and after using the Morningstar Retirement Manager service. Participants who increased their savings deferral rate after using Morningstar Retirement Manager are included in this data point. 5 The Impact of Expert Guidance on Participant Savings and Investment Behaviors, Working Paper (David Blanchett, August 2014). For purposes of this study, do-it-yourself participants (those mentioned as not previously using the Morningstar Retirement Manager advice and managed accounts service) are defined as those who have an allocation of 20% or less to an investment classified as an allocation (such as a target-date) fund by Morningstar, Inc. prior to using Morningstar Retirement Manager. The portfolio asset allocations held by participants prior to using Morningstar Retirement Manager were classified by investment type and those meeting the definition of a do-it-yourself investor s portfolio were analyzed to determine number of funds held in the portfolio. 6 The Impact of Expert Guidance on Participant Savings and Investment Behaviors, Working Paper (David Blanchett, August 2014). Average equity allocations of participants prior to using Morningstar Retirement Manager were analyzed from May 2007 to February 2014 and compared to the value of the S&P 500 Index. 7 The My Retirement Progress percentage is calculated by Schwab Retirement Plan Services, Inc. (SRPS) based on and using the data formulated by independent registered investment advisers GuidedChoice Asset Management, Inc. ( GuidedChoice ) or Morningstar Investment Management LLC, a subsidiary of Morningstar, Inc. GuidedChoice or Morningstar Investment Management formulates and provides estimated monthly income projections in retirement using savings and investment data and assumptions which include, but are not limited to, current retirement plan balance and savings rate, projected date of and estimated years in retirement, and estimated replacement income. SRPS cannot alter or influence any of the calculations that GuidedChoice or Morningstar Investment Management provides. SRPS then uses the projections formulated by GuidedChoice or Morningstar Investment Management to express the potential gap in retirement savings as a percentage that is made available as part of the retirement plan record keeping and related services provided by SRPS. GuidedChoice and Morningstar Investment Management are not affiliated with or agents of SRPS; Charles Schwab & Co., Inc., a federally registered investment advisor; or their affiliates. Projections and other information regarding the likelihood of various retirement income and/or investment outcomes are hypothetical in nature, do not reflect actual results, and are not guarantees of future results. Results may vary with each use and over time. To obtain more information about how the percentage is calculated or to provide additional information that can impact My Retirement Progress calculations, visit workplace.schwab.com or call 800-724-7526. The Morningstar name and logo are registered marks of Morningstar, Inc. Brokerage Products: Not FDIC-Insured No Bank Guarantee May Lose Value The Charles Schwab Corporation provides services to retirement and other benefit plans and participants through its separate but affiliated companies and subsidiaries: Charles Schwab Bank; Charles Schwab & Co., Inc.; and Schwab Retirement Plan Services, Inc. Brokerage products and services are offered by Charles Schwab & Co., Inc. (Member SIPC). Trust, custody, and deposit products and services are available through Charles Schwab Bank. Schwab Retirement Plan Services, Inc. provides recordkeeping and related services with respect to retirement plans. Schwab Stock Plan Services provides equity compensation plan services and other financial services to corporations and executives through Charles Schwab & Co., Inc. ( Schwab ). Schwab, a registered broker-dealer, offers brokerage and custody services to its customers. Compliance Solutions comprises Schwab Designated Brokerage Services (DBS), a division of Charles Schwab & Co., Inc. ( Schwab ), and Schwab Compliance Technologies, Inc. ( SchwabCT ), formerly Compliance11, Inc. DBS provides brokerage solutions for corporate clients who monitor their employees securities activity. SchwabCT provides technology solutions for corporate clients to help facilitate their compliance technology program implementation. Schwab Compliance Technologies, Inc. and Charles Schwab & Co., Inc. are separate but affiliated entities, and each is a subsidiary of The Charles Schwab Corporation. Executive Services (a separate service offered by Charles Schwab & Co., Inc.) is not intended to be a substitute for specific individualized tax or legal advice. Schwab does not provide tax or legal advice and does not provide tax or financial planning services for assets held in a qualified plan. Where specific advice is necessary or appropriate, please consult an attorney, qualified tax advisor, CPA, financial planner, or investment manager. Outcomes not guaranteed. Please be aware that brokerage products and services provided by Charles Schwab & Co., Inc. (CS&Co.) (Member SIPC) through Schwab branches are separate and distinct from the services offered through your retirement plan serviced by Schwab Retirement Plan Services, Inc. Any fees incurred for non-plan related CS&Co. products or services provided by the Schwab branches will be incurred by the individual investor and not be paid by your retirement plan or Plan Sponsor. 17

.. Our commitment to you Schwab Retirement Plan Services is more than a recordkeeper. We re committed to keeping a client-focused perspective and supporting you and your participants through innovative products, exceptional service, and thought leadership. We believe that what we do every day makes a difference. And we re dedicated to our charge of giving every one of your participants the best opportunities for creating the retirement savings they need to take ownership of their financial futures. Please contact your Schwab Retirement Plan Services representative to discuss how we can help you create better outcomes for your plan participants. Call 800-790-5561 or visit schwab.com/ RetirementPlanServices. 2016 Schwab Retirement Plan Services, Inc. All rights reserved. CC0626637 (0516-FRX4) MKT92131-01 (07/16) 00169853