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Independent Assessment Report

Fiduciary Firewall Consulting, Inc.

 

CEFEX Investment Advisor Certification

 

 

Investment Advisor Definition

 

A fiduciary who is responsible for managing a client’s overall investment strategy, which may include deciding on the client’s asset allocation, developing the client’s investment strategy, implementing the strategy with appropriate Investment Managers, and monitoring the strategy, on a one-time or ongoing basis. The term refers to those who provide specific or comprehensive investment advice including financial advisors, broker-consultants, investment consultants, wealth managers, financial consultants trust officers, financial planners and fiduciary advisers.

 

SECTION 1 – COMPANY INFORMATION

CEFEX File No.: CFX10128
Company Name: Fiduciary Firewall Consulting, Inc.
Address: 4139 West Walton Blvd. Suite D   Waterford   MI   48329   US
Phone: 800.754.9933

 

SECTION 2 – ASSESSMENT DETAILS

Date of Registration: 2020.07.20
Assessment Number: R9
Assessment Team:
Position Name Company
Analyst Kathleen M. McBride FiduciaryPath, LLC.
Client Brian Lakkides Fiduciary Firewall Consulting, Inc.

 

CEFEX Registration Committee (CRC)

The CEFEX Registration Committee is responsible for ensuring the consistency, impartiality and technical merit of CEFEX assessments. Members of the CRC include: Blaine F. Aikin, CFP®, CFA, AIFA® founder and principal Fiduciary Insights, J. Richard Lynch, AIFA®, consultant, instructor and subject matter expert for Fi360, David A. Vriesenga, Senior Partner Vriesport Consulting Services, Roger Levy, AIFA®, Managing Director Cambridge Fiduciary Services LLC, Matthew Boyle, AIFA® Director of Operations, CEFEX and Carlos Panksep, Vice President, CEFEX.

Attestation

The Analyst is independent of the registered firm. He/she has not been employed or compensated by the registered firm for a period of at least 2 years prior and 6 months following this assessment, for the purposes of providing fiduciary consulting services. The Analyst is an Accredited Investment Fiduciary Analyst (AIFA®) and has the adequate expertise and proficiency to perform this assessment.

Purpose and Scope of this Assessment:

To evaluate the Advisor’s conformance to the practices and associated criteria as defined in the document “Prudent Practices for Investment Advisors” (the Standard) for the declared scope of registration. A full copy of the Standard which is the basis for this assessment, can be found in the Prudent Practices Handbook here.

The scope of registration is as follows:

Service in a fiduciary capacity to provide 1) fee benchmarking and analysis of corporate defined contribution retirement plans, 2) fiduciary compliance and risk assessment, 3) one-time or on-going consulting and compliance monitoring services, and 4) implementation and coordination of a single point-of-contact, fee only, fully outsourced fiduciary services and daily plan management solution for defined contribution plans.

Summary of Assessment Methodology:

The assessment requires that the Analyst plan and perform a review of a representative sample of the Advisor’s written records, interviews with appropriate personnel and, on a test basis, collect evidence supporting the actions taken by the Advisor in providing services to its clients. Sampling of records was conducted in accordance with the statistical guidelines used by the International Organization for Standardization, which requires a maximum sample size equal to the square root of the total available records.

Assessment elements include:

 

SECTION 3 - ASSESSMENT FINDINGS

 

The following Practices were assessed within the 3 months prior to the Date of Registration shown above and found to be in conformity.

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No. Practice Status
1.1 The Investment Service Provider demonstrates an awareness of its own fiduciary duties and responsibilities, if any, and those of the clients it serves.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
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1.1.1   The fiduciary Practices and Procedures defined in this handbook are applied.
1.1.2   Representatives of the Investment Service Provider receive training regarding their own fiduciary obligations and those of the client segments they serve.
  Substantiation


1.2 Investments are managed in accordance with applicable laws, trust documents, and written investment policy statements (IPS).  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
1.2.1   Investments are managed in accordance with all applicable laws.
1.2.2   Investments held in trusts are managed in accordance with Client trust documents.
1.2.3   Investments are managed in accordance with each Client's written IPS.
1.2.4   Documents pertaining to the investment management process are filed in a centralized location.
  Substantiation


1.3 The roles and responsibilities of the Investment Service Provider (whether serving as a fiduciary or non-fiduciary) are defined, documented, and acknowledged.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
1.3.1   The roles and responsibilities of all parties are documented in the IPS.
1.3.2   The Investment Service Provider demonstrates an awareness of, and an ability to effectively communicate, its duties and responsibilities.
1.3.3   The Investment Service Provider acknowledges its fiduciary (or non-fiduciary) status in writing.
  Substantiation


1.4 Potential conflicts of interest are appropriately managed.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
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1.4.1   Policies and procedures are in place to manage potential conflicts of interest.
1.4.2   Designated senior staff are assigned responsibility to oversee and manage potential conflicts of interest.
1.4.3   Investment Service Providers acting in a fiduciary capacity are not involved in self-dealing.
  Substantiation


1.5 Service agreements and contracts are in writing, and do not contain provisions that conflict with fiduciary standards of care.   Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
1.5.1   Agreements and contracts are periodically reviewed to ensure consistency with the needs of the Client.
1.5.2   Agreements and contracts are periodically reviewed by legal counsel.
1.5.3   Compensation arrangements and affiliations with other service providers are fully disclosed.
  Substantiation


1.6 Assets are within the purview of the relevant judicial system and are protected from theft and embezzlement.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
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1.6.2   The Investment Service Provider maintains appropriate surety bonds or insurance to protect assets held on behalf of clients from dishonest acts.
  Substantiation


2.5 Selected asset classes are consistent with implementation and monitoring constraints.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
2.5.1   The Investment Service Provider has the time, inclination, and knowledge to effectively implement and monitor investments in the selected asset classes.
2.5.2   The process and tools used to implement and monitor investments in the selected asset classes are effective.
2.5.3   Consideration has been given of the ability to access suitable investment products within all selected asset classes.
  Substantiation


2.6 The investment policy statement contains sufficient detail to define, implement, and monitor the client's investment strategy.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
2.6.1   The investment policy statement identifies the bodies of law governing the portfolio.
2.6.2   The investment policy statement defines the duties and responsibilities of all parties involved.
2.6.3   The investment policy statement specifies risk, return, and time horizon parameters.
2.6.4   The investment policy statement defines diversification and rebalancing guidelines consistent with risk, return, and time horizon parameters.
2.6.5   The investment policy statement defines the due diligence criteria for selecting investment options.
2.6.6   The investment policy statement defines procedures for controlling and accounting for investment expenses.
2.6.7   The investment policy statement defines monitoring criteria for investment options and service vendors.
  Substantiation


2.7 When socially responsible investment strategies are elected, the strategies are structured appropriately.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
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2.7.1   The purpose and mission of client organizations or goals and objectives of individual investors have been evaluated to determine whether socially responsible investing is appropriate and/or desirable for the portfolio.
2.7.2   If an investment fiduciary has elected to implement a socially responsible investment strategy, the IPS is appropriately structured, implemented, and monitored.
  Substantiation


3.1 The due diligence process used to select investments is implemented in conformity with generally accepted investment principles.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
3.1.1   A sound due diligence procedure for selecting investment options exists.
3.1.2   The due diligence process is consistently applied.
  Substantiation


3.2 The Investment Service Provider provides fiduciary clients services to assist them in meeting “safe harbor” provisions (when elected).  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
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3.2.1   Fiduciary clients are provided agreed upon services that are intended to help them gain the protection of "Safe Harbor" provisions
  Substantiation


3.3 Generally accepted investment principles are applied to select the investment vehicles offered to fiduciary clients.   Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
3.3.1   Decisions regarding passive and active investment strategies are documented and appropriately implemented.
3.3.2   Decisions regarding the use of separately managed and commingled accounts, such as mutual funds and unit trusts, are documented and appropriately implemented.
3.3.3   Regulated investment options are selected over unregulated options when comparable risk and return characteristics are projected.
3.3.4   Investment options that are covered by readily available data sources are selected over similar alternatives for which limited coverage is available.
  Substantiation


3.4 A due diligence process is followed in selecting service providers, including the custodian.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
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3.4.1   A documented due diligence process is applied to select the custodian and all other service providers.
3.4.2   Each custodian and any other investment service provider that takes possession of client funds have appropriate and adequate insurance to cover losses from dishonest acts
3.4.3   An appropriate sweep money market fund is selected.
  Substantiation


4.1 Periodic reports compare investment performance against appropriate index, peer group, and IPS objectives.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
4.1.1   The performance of each investment option is periodically compared against an appropriate index, peer group, and due diligence procedures defined in each Client's IPS.
4.1.2   The information that is provided in performance reports is relevant to each Client's circumstances and consistent with service agreements and contracts.
4.1.3   "Watch list" procedures are followed for underperforming investment options.
4.1.4   Rebalancing procedures are followed.
  Substantiation


4.2 Periodic reviews are made of qualitative and/or organizational changes of investment decision-makers.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
4.2.1   Periodic evaluations of the qualitative factors which may impact selected money managers are periodically evaluated.
4.2.2   Unsatisfactory news regarding an Investment Manager is documented and acted on in a timely manner.
  Substantiation


4.4 Fees for investment management are consistent with agreements and with all applicable laws.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
4.4.1   A summary of all parties being compensated from each portfolio has been documented, and the fees are reasonable given the level of services rendered.
4.4.2   The fees paid to each party are periodically examined to determine whether they are consistent with service agreements.
4.4.3   The fees being paid for various services are periodically compared with industry benchmarks.
  Substantiation


4.5 "Finder's fees" or other forms of compensation that may have been paid for asset placement are appropriately applied, utilized, and documented.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
4.5.1   All parties compensated from portfolio assets have been identified, along with the amount (or schedule) of their compensation.
4.5.2   Compensation paid from portfolio assets has been determined to be fair and reasonable for the services rendered.
  Substantiation


4.6 There is an effective process to conduct assessments of conformity to all fiduciary practices applicable to the Investment Service Provider and, if applicable, to conduct fiduciary assessments of fiduciary clients.  Show Detail   Hide Detail   Show Substantiation   Hide Substantiation Conformity
Detail
4.6.1   Each clients's IPS is reviewed at least once a year.
4.6.2   Internal fiduciary assessments are conducted at planned intervals (at least annually) to determine whether (a) appropriate policies and procedures are in place to address all fiduciary obligations and (b) such policies and procedures are effectively implemented and maintained.
4.6.3   Fiduciary assessments performed for fiduciary clients are conducted in a manner consistent with recognized standards such as ISO19011
4.6.4   All fiduciary assessments are conducted in a manner that ensures objectivity and impartiality.
  Substantiation


SECTION 4 - ASSESSMENT CONCLUSIONS AND RECOMMENDATION

 

Based on the findings obtained during the Assessment, the Company is in substantial conformity to the Standard, and is recommended for CEFEX registration.

This assessment has been reviewed by the CEFEX Registration Committee to maintain impartiality and consistency in the registration process. For details on the complete assessment process, please visit www.fi360.com/cefex.

 

Note to Report

The information contained in this report is a summary of an assessment conducted by CEFEX, Centre for Fiduciary Excellence and is valid for 1 year from the Date of Registration shown. The report is suitable for public distribution at the discretion of the certified firm. For any questions related to this report, please contact CEFEX at admin@cefex.org.

 

CEFEX, Centre for Fiduciary Excellence is an independent certification organization, and is part of Broadridge Fi360 Solutions. CEFEX works closely with industry experts to provide comprehensive assessment programs to improve the fiduciary practices of investment stewards, advisors, recordkeepers, administrators and managers.
Broadridge Fi360 Solutions is a fiduciary education, training and technology company, and helps financial intermediaries use prudent fiduciary practices to profitably gather, grow and protect investors’ assets. Since 1999, the firm has provided financial professionals with the tools necessary to act as a fiduciary in their work with investors. Broadridge Fi360 Solutions is also the home of the Accredited Investment Fiduciary® (AIF®) designation, the Fiduciary Focus Toolkit™ and the Fi360 Fiduciary Score®.