CEFEX registration is a demonstration of adherence to all fiduciary practices
contained in the handbook: Prudent Practices for Investment Advisors. A
CEFEX-certified Advisor is an acknowledged fiduciary, and may include Advisors
who assume responsibilities as defined in ERISA §3(38). The scope of
registration typically lists the types of clients (eg. DC Plans, DB Plans,
403(b), etc.) served by the Investment Advisor.
click here to download Fiduciary Practices for Investment Advisors
Many Advisors claim to be
fiduciaries, however since the topic is often confusing to investors and
trustees, these claims are difficult to prove.
Does the Advisor:
fiduciary responsibility in writing?
• have prudent investment processes in place
and in use?
• use best in class Service Agreements?
• make complete disclosures
regarding potential conflicts of interest?
In general, can the Advisor
demonstrate adherence to the highest standard of fiduciary care? CEFEX-certified
Investment Advisors certified by CEFEX will also receive a copy of
a legal opinion issued by Reish & Reicher of Los Angeles, CA to CEFEX
regarding the certification process. The legal opinion states, in substance,
that a firm receiving an Investment Advisor certification will have
demonstrated, as of the date of the certification, that it has practices and
procedures in place that equal or exceed the investment fiduciary requirements
of the Employment Retirement Income Security Act of 1974 (ERISA).
Click here to download a sample of this opinion.
The Benefits of Certification include:
Increased Assets Under Advisement:
Certification increases market
differentiation and investor (individual or institutional) confidence. With the
recent increase in investor anxiety due to scandals, bankruptcies, and lawsuits
and the increased press from the introduction of the PPA, fiduciaries can
differentiate themselves by assuring investors of their excellent practices.
Most investment litigation involves the omission of certain
fiduciary practices and/or prudent investment procedures, as opposed to the
commission of certain acts. Certification helps your firm maintain evidence of
3. Reduced Costs:
CEFEX-certified firms are eligible to
receive discounts on professional liability insurance premiums of up to 25%. The
certification acts as evidence that your firm is a lower risk for insurance
carriers. See Program Summary
4. Competitive Advantage:
responsibility' has become a watchword with trustees, investment committee
members, and even retail investors. Investment Advisors who can communicate
clearly how they manage investment decisions to a defined fiduciary standard,
will enjoy a major advantage over competitors.
See quotes from CEFEX-certified firms.
Advisors can determine their readiness for a certification assessment by
performing a “Self Assessment of Fiduciary Excellence: SAFE”. Please download the appropriate SAFE below, or perform an on-line
SAFE by clicking here:http://safe.actifi.com
A person that renders
investment advice for a fee or other compensation, direct or indirect, to IRA
accounts or ERISA retirement plan participants (per the Pension Protection Act
CEFEX registration is a demonstration of compliance with the
requirements of the Pension Protection Act, specifically final rule
§2550.408g-1, pertaining to the furnishing of investment advice to participants
and beneficiaries. This registration includes the audit of any applicable
eligible investment advice arrangements, which would be listed in the scope if
Quotes from CEFEX-certified firms.
“The Ingham Group uses our CEFEX certification to articulate our fundamental belief in total disclosure and best fiduciary practices. We go out of our way to educate our clients and prospects on the importance of sound fiduciary practices. We believe this certification should be a standard requirement in the selection of Investment Advisors, much like how SAS70 has become required in the recordkeeping industry. CEFEX certification has been instrumental to Ingham Group maintaining its client base and opening many new opportunities. Ingham group has experienced a 30% growth in AUM in the past year, thanks to our positioning, and proven track record.”
Ken Ingham, AIFA, President and CEO, Ingham Group, Miami, FL
“Slavic Mutual Funds Management Corporation has won many RFQ’s recently, and we can attribute our success to be due in part to our CEFEX certification. Since Slavic operates as a broker/dealer, an investment manager, a TPA and an advisor, we also believe the CEFEX process has helped improve the accountabilities within our organization. The better delineations between our disciplines has helped sustain improved corporate performance.”
John Slavic, President, Slavic Mutual Funds Management Corporation, Boca Raton, FL
“Unified Trust Company, NA became CEFEX registered in October 2006. Unified sought registration as an important independent assessment of our commitment to follow a prudent, consistent and standardized process based on Fiduciary Best Practices for Investment Advisors as promulgated by CEFEX. This independent verification means our clients, and those considering our services, can be confident that critical components of an investment strategy have been properly implemented. This can be especially important for retirement plan sponsors in today’s environment of increasing complaints and/or lawsuits alleging fiduciary misconduct. Being able to show adherence to this independent standard has given Unified a distinct advantage when competing with other investment advisors.
Successful retirement outcome is the cornerstone of Unified’s philosophy. As a fully discretionary trustee, we believe a prudent best practices approach improves investment outcomes for our clients and increases their financial goal success probability. Progress towards success can and should be measured. We have done extensive research on success probabilities and have been able to show that implementing the prudent best practices necessary for CEFEX registration improves the probability of success. Unified believes registration is more than a differentiator in the sales process; rather it will make a true positive difference in the most important consideration, successful outcome.
In the five months since Unified became CEFEX registered, assets under management have grown by 12.5%. In that same period, the S&P has added just over 5%. While the difference is likely due to many factors, we feel that our outcomes based approach based on prudent best practices is the overarching reason. The CEFEX registration is the distinctive sign to the marketplace that Unified Trust Co., N.A. unquestionably follows the highest fiduciary best practices standards.”
Dr. Gregory Kasten, MD, MBA, CFP, CPC, AIFA, CEO Unified Trust Company, NA.
“ The CEFEX Analyst’s assessment of our firm’s custodian function was thorough and produced many useful benefits to us. We have a much better appreciation of our clients’ perspectives of us. The CEFEX experience has caused us to alter the way we tell our firm’s service delivery message. Our CEFEX certification has won more business for us than we even hoped.”
Denys Pearce, Managing Director, Plan B Trustees Limited, Perth Australia.