CPI recently launched a new product called ClearDirection, which builds on a history of open architecture and leverages the resources and technology of its parent company, CUNA Mutual Group. At an Executive Roundtable in Madison, WI which included the heads of 10 of the top DC-focused broker dealers, CPI outlined the key features of their product, which is designed to take advantage of the two key issues currently dominating the advisor-sold DC world – fee transparency and fiduciary duty.
While maintaining the option for advisors to select from over 4,500 funds and act as fiduciaries themselves, ClearDirection offers 3(21) and 3(38) co-fiduciary services (for 2 and 5 basis points respectively) from Mesirow.
While treatment of participant revenue sharing is not a fiduciary requirement (although it is becoming a hot topic), CPI will levelize revenue sharing paid by participants by stripping out any non-investment related fees within the funds and applying them to offset the costs of running the plan and paying the advisors. The dirty secret of the DC world is that participants pay not based on their account balances but on how rich the revenue sharing is within the funds they select — which gives record keepers an incentive to promote those funds to either make the plan appear cheaper or provide them with greater profits.
CPI has also created a participant front end that lets participants know whether they are on target to retire based on a defaulted 80% income replacement ratio, and then allows them to make deferral or asset allocation adjustments to get on track.
“Building on the rich history of open architecture solutions through CPI, it was a natural progression to launch the ClearDirection platform,” said Micah DiSalvo, Director of Institutional Sales and Host of the Roundtable. “The broker dealer community has been very responsive to our new solution that combines a fully bundled platform with a co-fiduciary solution, levelized compensation and an ERISA bucket to offset revenue sharing at the plan level or participant level, along with our participant outcome tools.”
To support the record keeping, administration and advisory services, CPI charges an asset-based fee ranging from 65 basis points for $1 million plans with $10,000 account balances to 30 basis points for $7 million plans with more than $75 million balances, plus an annual and per-participant fee.
Bill Feldmaier, CPI’s National Sales Manager, told the audience that they have 21 wholesaler territories, each supported by internal wholesalers — which is the largest sales force for any open architecture firm and almost double the number CPI had when CUNA acquired them in 2009.
