Independent Assessment Report
United Way of Northeast Mississippi
CEFEX Investment Steward Certification
Investment Steward Definition
An Investment Steward is a person who has the legal responsibility for managing investment decisions, including plan sponsors, trustees, and investment committee members.
SECTION 1 – COMPANY INFORMATION |
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| CEFEX File No.: |
CFX10308 |
| Company Name: |
United Way of Northeast Mississippi |
| Address: | 213 West Main St., Suite 110 Tupelo MS 38804 US |
| Phone: | 662.841.9133 |
SECTION 2 – ASSESSMENT DETAILS |
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| Date of Registration: | 2023.05.22 |
| Assessment Number: | R8 |
| Assessment Team: | |
| Position | Name | Company |
|---|---|---|
| Analyst | Scott Reed | Hardy Reed, LLC |
| Analyst | Hardy Reed | Hardy Reed, LLC |
| Client | B B Hosch | United Way of Northeast Mississippi |
| Observer | Roger Levy | Cambridge Fiduciary Services LLC. |
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 may include: Blaine F. Aikin, CFP®, CFA, AIFA® founder and principal Fiduciary Insights, David A. Vriesenga, Senior Partner Vriesport Consulting Services, Roger Levy, AIFA®, Managing Director Cambridge Fiduciary Services LLC 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 Steward’s conformance to the practices and associated criteria as defined in the document “Prudent Practices for Investment Stewards” (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:
United Way of Northeast Mississippi Reserve and Endowment accounts where Hardy Reed serves as investment advisor and fiduciary consultant.
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:
- Background check (performed at initial assessment), including ADV, FINRA BrokerCheck (if applicable) and civil lawsuit databases.
- Document review including Investment Policy Statement, Investment Committee minutes, client performance reports, RFP’s in the selection of service providers, written evidence of Investment Manager reviews, and service agreements.
- Comparison of capital market inputs for asset allocation model assumptions to a benchmark
- Comparison of risk and return models to a benchmark
- Comparison of investment due diligence screens to a standard threshold
- Review of actual investments using a standard fiduciary scoring system. The Fiduciary Score is a measure of an investment’s position relative to a group of peers, using factors such as track record, assets, management tenure, style consistency, etc. over a period of three years.
- Review of arrangements with custodians, brokers and other service providers.
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 |
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| 1.1 | The investment steward demonstrates an awareness of fiduciary duties and responsibilities. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 1.1.1 The Investment Steward complies with all laws and rules that apply to the steward’s responsibilities. 1.1.2 The Investment Steward complies with all applicable Practices and Procedures defined in this Prudent Practices handbook. 1.1.3 The investment steward adheres to all applicable standards of conduct and code(s) of ethics required by law, regulation, employers, and professional organizations. |
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Substantiation
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| 1.2 | Investments and investment services under the oversight of the investment steward are consistent with governing documents. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 1.2.1 Investments and investment services are managed or overseen, in accordance with governing documents, including documents establishing the terms of an account or service provider engagement and the investment policy statement. 1.2.2 Documents pertaining to the investment management process, including records of decisions made by fiduciaries, are secure and readily and reliably accessible by authorized persons. |
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Substantiation
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| 1.3 | The roles and responsibilities of all involved parties, whether fiduciaries or non-fiduciaries, are defined and documented. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 1.3.1 All involved parties have acknowledged their roles and responsibilities and fiduciary or non-fiduciary status in writing. 1.3.2 The investment committee has a defined set of by-laws or operating procedures to which the committee adheres. |
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| 1.4 | The investment steward identifies material conflicts of interest and avoids or manages conflicts in a manner consistent with the duty of loyalty. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 1.4.1 Policies and procedures for overseeing and managing conflicts of interest, including to avoid self-dealing and making false or misleading statements, are defined and followed. 1.4.2 Conflicts of interest are avoided when prohibited by law and/or governing documents. 1.4.3 Conflicts of interest that are not avoided must be managed in the best interest of participants or beneficiaries. 1.4.4 Conflicts of interest that are not avoided must be disclosed. |
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| 1.5 | The investment steward requires agreements with service providers to be in writing and consistent with fiduciary obligations. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 1.5.1 The investment steward requires each service provider to fully disclose in writing all compensation arrangements and affiliations associated with the service agreement. 1.5.2 The investment steward must evaluate all material compensation, affiliations, and the fiduciary status of each service provider. 1.5.3 Agreements are periodically reviewed to ensure consistency with the objectives of the investment portfolio and/or the needs of participants or beneficiaries. 1.5.4 Comparative reviews of service agreements are conducted and documented approximately every three years. |
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| 1.6 | Sensitive personal identifying information and portfolio assets are prudently protected from theft and embezzlement. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 1.6.1 The Investment Steward has a reasonable basis to believe assets are within the jurisdiction of a viable judicial system. 1.6.2 Appropriate procedures are in place to secure and prudently protect the privacy of data. 1.6.3 Appropriate procedures are in place to assure that sensitive personal identifying information and assets are prudently protected from physical, operational, virtual, and other material risks associated with business disruptions. 1.6.4 The investment steward has a reasonable basis to believe assets are protected by appropriate insurance, bonding, internal controls, and security measures taken by fiduciaries and other service providers. 1.6.5 The investment steward has procedures in place to manage situations where the steward reasonably believes that assets are at risk due to suspicious behavior by service providers, fiduciaries, or others with access to or influence over the assets. |
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Substantiation
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| 2.1 | An investment time horizon has been identified for each investment portfolio. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 2.1.1 Sources, timing, distribution, and uses of cash flows are documented. |
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| 2.2 | An appropriate risk level has been identified for the portfolio. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 2.2.1 The expected volatility of the portfolio is understood by the investment steward and the quantitative and qualitative factors that were considered are documented. 2.2.2 “Large loss” scenarios have been identified and considered in establishing the portfolio’s risk level. 2.2.3 Expected disbursement obligations and contingency plans have been considered when establishing liquidity requirements for the portfolio and assessing the capacity to assume portfolio risk. |
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| 2.3 | The distribution of projected portfolio returns is evaluated in the context of risk and return objectives. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 2.3.1 The projected portfolio return is consistent with tolerance and capacity to assume volatility risk and investment goals and objectives. 2.3.2 Projected return assumptions for each asset class are based on reasonable risk premium assumptions. |
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| 2.4 | Selected asset classes are consistent with the portfolio’s time horizon and risk and return objectives. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 2.4.1 Asset classes are appropriately weighted to conform to the portfolio's specified time horizon and risk/return profile. 2.4.3 The Investment Steward, either directly or with the support of a designated service provider, assures that the methodology and tools used to establish appropriate portfolio diversification are prudent and consistently applied. |
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| 2.5 | Selected asset classes are consistent with implementation and monitoring constraints. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 2.5.1 The investment steward, either directly or with the support of a designated service provider, has the time, resources, knowledge, and skills to implement and monitor all selected asset classes. 2.5.2 The process and tools used to implement and monitor investments in the selected asset classes are appropriate. 2.5.3 Appropriate investment products are accessible within each selected asset class. |
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Substantiation
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| 2.6 | The investment policy statement contains sufficient detail to define, implement, and monitor the portfolio’s investment strategy. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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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 asset weighting and rebalancing guidelines consistent with risk, return, and time horizon parameters. 2.6.5 The investment policy statement defines 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. |
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Substantiation
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| 3.1 | A prudent due diligence process is followed to select each service provider. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 3.1.1 Prudent criteria are identified for each due diligence process used to select service providers. 3.1.2 The due diligence process used to select each service provider is documented. 3.1.3 Each due diligence process used to select service providers is consistently applied. |
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| 3.2 | Statutory or regulatory investment safe harbors that are elected are implemented in compliance with the applicable provisions. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 3.2.1 Available safe harbors are evaluated to determine if any advance the best interests of the investors and/or beneficiaries. 3.2.2 When elected, safe harbor provisions are implemented in compliance with requirements. |
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| 3.3 | Decisions regarding investment strategies and types of investments are made in accordance with fiduciary obligations and are documented. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 3.3.1 A prudent due diligence process is used to select investment strategies, investment managers, and investments. 3.3.2 Decisions regarding the selection of investments consider both qualitative and quantitative criteria. 3.3.3 The due diligence process used to select investment strategies, investment managers, and investments is documented and consistently applied. 3.3.4 Regulated investments are preferred over unregulated investments when all other characteristics are comparable. 3.3.5 Investments that are covered by readily available data sources are preferred over similar investments for which limited coverage is available when all other characteristics are comparable. 3.3.6 A prudent due diligence process is used to make decisions regarding the use of proprietary versus non-proprietary products, and separately managed versus commingled accounts. |
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Substantiation
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| 4.1 | Periodic reviews compare investment performance against appropriate market and peer group benchmarks and overall portfolio objectives. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 4.1.1 Investment performance of the overall portfolio is compared against an appropriate benchmark and evaluated in the context of portfolio objectives. 4.1.2 The performance of each investment option is periodically compared against an appropriate market and peer group benchmark and any other performance-related due diligence criteria defined in the investment policy statement. 4.1.3 Underperforming investments are monitored and decisions to retain or replace investments are documented. 4.1.4 Rebalancing procedures are reasonable, documented, and consistently applied. 4.1.5 Investment performance is periodically reported to participants, beneficiaries, or other stakeholders in a manner consistent with governing documents and fiduciary or regulatory obligations. |
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| 4.2 | Periodic reviews are made of qualitative and/or organizational changes of investment managers and other service providers. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 4.2.1 Periodic evaluations of the qualitative factors that may impact the results or reliability of investment managers are performed. 4.2.2 Negative news and other material information regarding an investment manager or other service provider are considered and acted on in a timely manner. 4.2.3 Deliberations and decisions regarding the retention or dismissal of investment managers and other service providers are documented. 4.2.4 Qualitative factors that may impact service providers are considered in the contract review process. |
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| 4.4 | Periodic reviews are conducted to ensure that investment-related fees, compensation, and expenses are fair and reasonable for the services provided. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 4.4.1 A summary of all parties being compensated from the portfolio or from plan or trust assets and the amount of compensation has been documented. 4.4.2 Fees, compensation, and expenses paid from the portfolio or from plan or trust assets are periodically reviewed to ensure consistency with all applicable laws, regulations, and service agreements. 4.4.3 Fees, compensation, and expenses paid from the portfolio or from plan or trust assets are periodically reviewed to ensure such costs are fair and reasonable based upon the services rendered and the size and complexity of the portfolio or plan. |
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| 4.5 | There is a process to periodically review the steward’s effectiveness in meeting its fiduciary responsibilities. Show Detail Hide Detail Show Substantiation Hide Substantiation | Conformity |
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Detail 4.5.1 Fiduciary assessments are conducted at planned intervals to determine whether (a) appropriate policies and procedures are in place to address all fiduciary obligations, (b) such policies and procedures are effectively implemented and maintained, and (c) the investment policy statement is reviewed at least annually. 4.5.2 Fiduciary assessments are conducted in a manner that promotes objective analysis and results are documented and reviewed for reasonableness. |
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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 cefexadmin@broadridge.com.
CEFEX, Centre for Fiduciary Excellence is an independent certification organization, and is part of Broadridge Retirement and Workplace. 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 Retirement and Workplace offers fiduciary education, training and technology solutions, 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 Retirement and Workplace is also the home of the Accredited Investment Fiduciary® (AIF®) designation, the Fiduciary Focus Toolkit™ and the Fi360 Fiduciary Score®.
