Choosing an Adviser: Department of Labor and SEC Guidance
In 2005, the Department of Labor and SEC developed the following questions to assist plan fiduciaries in evaluating the objectivity of recommendations provided by a plan consultant. Below, SHDR-IA provides answers to all these important questions.
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Are you registered with the SEC or a state securities regulator as an investment adviser? If so, have you provided me with all the disclosures required under those laws (including Part II of Form ADV)?
SHDR Investment Advisers, Inc. (SHDR-IA) is registered with the U.S. Securities & Exchange Commission (SEC) under the Investment Advisers Act of 1940 as amended. A current copy of our Form ADV is available on the SEC Investment Adviser Public Disclosure site.
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Do you or a related company have relationships with money managers that you recommend, consider for recommendation, or otherwise mention to the plan? If so, describe those relationships.
No. SHDR-IA has no such relationships and remains unbiased in its evaluations of managers.
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Do you or a related company receive any payments from money managers you recommend, consider for recommendation, or otherwise mention to the plan for our consideration? If so, what is the extent of the payments in relation to your other income (revenue)?
SHDR-IA does NOT accept any form of compensation from investment managers.
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Do you have any policies or procedures to address conflicts of interest or to prevent these payments or relationships from being a factor when you provide advice to your clients?
As previously stated, SHDR-IA does NOT accept any form of compensation from investment managers. We thereby avoid conflicts of interest.
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If you allow plans to pay your consulting fees using the plan’s brokerage commissions, do you monitor the amount of commission paid and alert plans when consulting fees have been paid in full? If not, how can a plan make sure it does not over-pay its consulting fees?
SHDR-IA does not accept any commissions or marketing fees that might be used to offset its advisery fees directly. However, where the custodian accepts such fees and an offset situation occurs, the custodian is billed by SHDR-IA directly and the custodian is responsible for reallocating any excess commissions or marketing payments paid by managers to the plan.
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If you allow plans to pay your consulting fees using the plan's brokerage commissions, what steps do you take to ensure the plan receives best execution for its securities trades?
SHDR does not choose the broker-dealer and does not monitor the broker-dealer. SHDR-IA assists in choosing the various money managers in the plan who then monitor the best execution for the trades which they make in forming and maintaining their portfolios.
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Do you have any arrangements with broker-dealers under which you or a related company will benefit if money managers place trades for their clients with such broker-dealers?
SHDR has no arrangements with any broker-dealers.
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If you are hired, will you acknowledge in writing that you have a fiduciary obligation as an investment adviser to the plan while providing the consulting services we are seeking?
Yes. SHDR-IA always accepts its cofiduciary status in writing.
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Do you consider yourself a fiduciary under ERISA with respect to the recommendations you provide the plan?
Yes.
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What percentage of your plan clients utilize money managers, investment funds, broker services or other service providers from whom you receive fees?
None. SHDR-IA bills its fees directly and receives no other compensation from any service providers.