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What does it mean to be independent?

Frequently, independence is associated with the topics of fee transparency and potential conflicts of interest. Being independent means Ironshore is neither affiliated with any entity that provides investment products, nor compensated directly or indirectly by any entity other than the plan or plan sponsor to whom Ironshore contractually agrees to provide advisory service. There are no hidden or ambiguous fees paid to Ironshore in the form of commissions or revenue-share. When an advisor is paid directly by the plan or the plan sponsor, the potential of conflicts is reduced (and perhaps eliminated). On the other hand, where the advisor is paid from the investments, there is an obvious conflict, in the sense that the advisor is incentivized to recommend mutual funds or other investments that provide higher compensation.

What does it mean to focus on retirement plans?

In addition to defining Ironshore’s target market, providing advisory services mindful of fiduciary duties imposed by ERISA influences Ironshore’s investment philosophy. We believe the average participant in a company-sponsored retirement plan often lacks another source of retirement savings outside the plan. In addition, there are structural differences between retirement plans and investment accounts in a wealth management environment, such as end of day trading and a 30-day notification of fund changes to participants. For these reasons, Ironshore’s fund evaluation approach places greater emphasis on risk management and a fund’s ability to demonstrate lower volatility of consistent, above-average returns.

What ERISA fiduciary services does Ironshore provide?

Under the Employee Retirement Income Security Act of 1974 (ERISA), a fiduciary is anyone who exercises discretionary authority or control over a plan’s management or assets, including those who provide investment advice to the plan. Fiduciary responsibility requires that one act solely in the best interest of plan participants or their beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Many of the actions involved in operating a plan make the person or entity performing them a fiduciary. Ironshore most often supports the plan sponsor in a co-fiduciary role by establishing an investment program that guides the initial and ongoing evaluation of the plan’s investment options and provides a reasonable basis for the resulting decisions. In addition, Ironshore may consult on fiduciary governance matters such as plan design and regulatory compliance.

Are there different types of investment fiduciary service?

Yes, investment fiduciary services are provided by advisors either in a discretionary or non-discretionary manner. An advisor who makes investment decisions on behalf of the plan fiduciary is acting with discretion and is considered a fiduciary investment manager in accordance with ERISA section 3(38). Non-discretionary fiduciary investment advisors, as defined by ERISA section 3(21) recommend investments to the plan fiduciary who makes the selection decision. While Ironshore predominantly provides investment fiduciary services in a 3(38) discretionary role, certain clients have chosen to engage us as a non-discretionary 3(21) investment advisor. The underlying fund evaluation process is the same in each role – the difference lies in who’s responsible for the final decision.

Should a plan sponsor hire a third-party advisor?

The duty to act prudently is one of a fiduciary’s central responsibilities under ERISA. Prudence focuses on the process for making fiduciary decisions. It requires expertise in a variety of areas, such as investments. Lacking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions. There is no requirement that plan committees use advisors. It is a best practice, however, since most plan sponsor representatives who administer the plan lack the skill or expertise to prudently select and monitor investments. As a result, it is imperative that a third-party advisor be hired to implement a program that will comply with this ERISA requirement. Still, a plan sponsor is required to monitor the third-party advisor periodically to assure that it is handling the plan’s investments prudently and in accordance with the appointment.

How does Ironshore effectively evaluate and monitor such a large subject universe like that of open-end mutual funds and exchange-traded funds?

Ironshore leverages industry-leading technology to conduct its proprietary review of investment options in a deliberate, consistent and repeatable manner. Comparative analysis at the fund level instead of by share class, as well as an initial filtering of the investment universe by asset class, fund size and manager tenure narrows the scope of securities to be evaluated. Ironshore’s documented process primarily uses various measures of return and risk to quantitatively evaluate a fund’s performance relative to its peers over multiple time periods. The continuous monitoring of investments using quantitative scoring within asset categories allows Ironshore to limit more in-depth qualitative analysis only to those funds with the highest relative ratings. Furthermore, we incorporate third-party market, economic and investment research into our analysis to support relative fund ratings and/or differentiate competing fund options with comparable quantitative scores.

Does Ironshore always choose or recommend the lowest cost investments?

Ironshore recognizes that a fund’s expense ratio is a direct, immediate headwind to performance by reducing the realized return on investment for participants. However, no single factor drives Ironshore’s investment selection decision, and there is no guarantee that a fund will generate the best combination of risk and return simply because it has the lowest cost. Not only does the relative scoring methodology use return data that is net of a fund’s expense ratio, it also includes the prospectus net expense ratio for each fund as a component of quantitative evaluation. In this way, Ironshore gives the appropriate consideration to a fund’s cost in the evaluation process, but such evaluation will not always result in choosing or recommending the lowest cost investment. Finally, Ironshore doesn’t believe selecting an investment solely on cost, or any other single factor, will meet the prudence requirement of ERISA fiduciary duty.

How is Ironshore compensated for its service?

Ironshore is compensated for consulting services pursuant to a direct service agreement with the plan sponsor fiduciary. Generally, such agreement stipulates a fixed annual fee (payable quarterly in arrears) as opposed to the AUM-based fee model that is prevalent in the investment industry. A fixed fee more accurately relates the service cost with the work product delivered instead of the variable, and often increasing, amount of plan assets. After all, the scope of an advisor’s work doesn’t materially change due to an increase or decrease in an individual plan’s AUM.

What does Ironshore charge for fiduciary consulting services?

Ironshore’s fees are negotiated in the realm of a competitive market environment and agreed upon with each client in a fixed amount of dollars for a specified period of time. This fee may initially be derived using an AUM-based calculation, but the actual fee charged is always a fixed amount that doesn’t fluctuate with changes in the value of plan assets. Solely for disclosure purposes, if Ironshore’s fixed fees were converted to an AUM-based fee model they would generally fall within the range of 0.05% to 0.15%.

Who are Ironshore’s clients?

Ironshore’s clients represent tax-advantaged retirement plans sponsored by companies engaged in for-profit activities and those organized for non-profit pursuits. These include plans that are qualified under sections 401(k), 403(b) and 457(b) of the Internal Revenue Code. The plan sponsors’ business activities include professional service firms, such as attorneys, doctors and engineers, as well as manufacturing facilities and institutions of higher education.

Where are Ironshore’s clients located?

The majority of Ironshore’s clients are located in south central Ohio. However, Ironshore also serves clients in California, Indiana, Kentucky and Virginia. Ironshore’s business is not geographically constrained and is able to deliver expert fiduciary service to plan’s anywhere in the nation.

Where is Ironshore located?

Ironshore is a single-member Alabama limited liability company that maintains taxable residence in Florida. However, we are location independent and regularly meet with clients or prospects at their place of business or another place of their choosing. Ironshore’s business operations utilize cloud-based applications while relying exclusively on intellectual capital, thus eliminating the need for a physical office presence. This avoidance of what is often a significant fixed expense is a key factor in Ironshore’s ability to offer highly competitive pricing for its services.

Why is Ironshore registered with the Securities & Exchange Commission (SEC)?

Ironshore is a large advisor having more than $100 million in assets under management (AUM), which meets one of several conditions allowing registration with the SEC instead of registering with one or more state securities agencies. Federal registration is preferred to state registration(s) because it simplifies compliance and lowers costs by limiting required adherence to one set of rules while not restricting pursuit of business opportunities due to geographic borders.

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