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August 22, 2005
Social(k) Allows Socially Responsible Investment Retirement Portfolios to More Fully Diversify
    by William Baue

ExpertPlan administers a 401(k) platform that solves the problem of limited asset class diversification by offering 25 SRI funds from nine fund families than span the spectrum.

Ever since the US Department of Labor (DOL) issued the 1998 "Calvert letter" allowing socially responsible investment (SRI) in company retirement plans covered by the Employee Retirement Income Security Act (ERISA), more and more 401(k) plans are adding SRI funds choices. All too often, however, plan administrators add just a smattering of SRI funds, making it difficult if not impossible to diversify SRI retirement portfolios across asset classes. Why not create a comprehensive platform offering a broad range SRI funds spanning the gamut of asset classes?

That is exactly what Rob Thomas, a retirement plan consultant with UBS Financial Services, decided to do. Working outside his day job, he collaborated with ExpertPlan, a defined contribution retirement plan platform provider, to launch the Social(k) Retirement Plan platform last week.

"I have been working with companies for the past seven years providing a platform through ExpertPlan that has a small selection of SRI funds, similar to other platforms available in the market," Mr. Thomas told "We made the decision to increase the number of funds offered, and took existing technology from an established provider and built a better platform."

Social(k) can be appropriate not only for individual employees wanting a full plate of SRI options, but also for companies practicing corporate social responsibility (CSR).

"Today, many companies are working hard to be better corporate citizens--from recycling to energy conservation, from community involvement to corporate diversity, from shareholder advocacy to socially responsible investing, these companies look to make positive contributions to local and global communities," explained Mr. Thomas. "By offering a low-cost solution with a large number of SRI funds, we allow companies to put their money where their mouth is and employees a chance to align retirement assets with their beliefs."

What distinguishes Social(k) is its breadth of SRI choices, offering 25 funds from nine fund families, including Calvert, Citizens, Ariel, Pax World, Domini, and Sierra Club, as well as SRI funds from mainstream firms such as AXA Enterprise, Neuberger Berman, and Alger. However, Social(k) does not limit its choices exclusively to SRI options.

"ExpertPlan also offers about 30 regular fund families with over 300 funds to pick from, including actively managed funds, index funds, and lifestyle funds--all no load or load waived since this is a retirement plan platform," said Mr. Thomas.

Neither does Social(k) limit according to business size, or even according to classification as a business.

"ExpertPlan has plans for companies of all sizes, from start ups to companies with over 1000 employees--any size works," said Mr. Thomas. "Nonprofits with ERISA-qualified plans are welcome as well."

The Social(k) website provides access to mutual fund performance data and fact sheets, as well as links to fund prospectuses. When it comes to comparing mutual fund financial performance or social and environmental priorities, however, Social(k) recognizes its limitations by leaving this kind of consultation to financial advisors, such as those retained by companies to work with their employees. Social(k) does offer assistance in setting up plans.

"Plan design and set-up is done with the help of the ExpertPlan team that includes an ERISA attorney on staff," Mr. Thomas said. "This is a fully bundled platform that includes the Third Party Administration work that plans need to have done annually, which is all done online and is very easy to manage, according to existing clients."

In terms of expense, the plan is user-friendly for participants.

"Transfers and exchanges can be made daily with no charge unless the funds are subject to short-term trading redemptions, which the platform will process on behalf of the fund family," said Mr. Thomas.

Social(k) allocates expense primarily to plan providers, charging participants $40 per year but $950 annually to companies, as well as $750 to set up a new plan or $1,250 to convert an existing plan.


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