OVERVIEW

The ASPPA Recordkeeper Certification is an excellent way for firms to distinguish themselves in the marketplace. Just as ASPPA's credentialed members have long enjoyed being recognized as leaders in the retirement profession, the ASPPA Recordkeeper Certification recognizes firms for their adherence to a standard of excellence and dedication to industry best practices.

The ASPPA Recordkeeper Certification program provides a firm-level certification addressing three business models in the recordkeeping industry. The models, referred to as service classes, are:

• Service Class I - firms that bundle recordkeeping services along with their proprietary investment products;
• Service Class II - firms that offer recordkeeping independent of investment products; and
• Service Class III - firms that perform third party administration and compliance services only.

Background

ASPPA formed a task force in early 2007 comprised of senior executives and operations officers of recordkeepers, drawn from each of the three defined business models, as well as other industry advisors. The task force's mission was to create a collection of best practices for recordkeepers and establish a program to promote those best practices. The ASPPA Recordkeeper Certification program was announced at the 2007 ASPPA Annual Conference in Washington, D.C. in October of 2007 and the complete program was formally introduced at The ASPPA 401(k) SUMMIT in Orlando, FL in February of 2008.

Benefits of Certification

The ASPPA Recordkeeper Certification program offers many benefits to recordkeepers, plan sponsors, investment advisors, investment managers and the industry as a whole. Some of the most significant benefits include:

• Pre-empts Federal Licensing for Recordkeepers
     Self-regulation uses a defined industry standard
• Public Confirmation
     Instills trust throughout the industry
• Commitment to Stakeholders
      Ongoing rigorous audits ensure adherence to standards and continuous improvement
• Market Recognition
     The ASPPA mark conveys an identity of excellence
• Effective Risk Management
     Reduces the potential of future liability claims
• Competitiveness
     Meets plan sponsors' demand for certified providers and provides certified recordkeeper firms a competitive advantage over non-certified firms

"The ASPPA Recordkeeper Certification is a major step in our continuing goal to meet the highest standards required by Plan Sponsors and Investment Fiduciaries. For the near future, we envision this certification giving us an advantage over recordkeepers that are not able to meet the requirements. However, it won�t be too long until ASPPA certification will become the standard just to be considered as a service provider."

THE CERTIFICATION PROCESS

In order to become registered in the ASPPA Recordkeeper Certificate program, recordkeeping firms participate in a four-step assessment process, most of which is performed by an independent auditing firm. Assessments typically take four to six weeks to complete. At the conclusion of the assessment, the qualified independent auditing firm prepares a report and presents it to the CEFEX Registration Committee (CRC).

Although ASPPA has oversight over the ASPPA task force, which maintains the Standard of Practices and the associated practice criteria, the certification program is run by the Centre for Fiduciary Excellence (CEFEX) in order to maintain complete independence during the registration decision process. Following approval at the CRC, CEFEX awards the ASPPA Recordkeeper Certificate to those firms that successfully satisfy the audit criteria and meet best practices. Registered ASPPA Recordkeepers are entitled to exhibit the ASPPA "service provider excellence" certification mark.

The Four-step Evaluation Process

Step One:   The first step is data collection. In this step, the independent auditing firm obtains documents and information from the candidate and constructs an assessment profile.

Step Two:   Next, the independent auditing firm conducts an onsite visit, that includes interviews with the recordkeeper's senior officials, a sampling of the candidate's quality management system, analysis of its key personnel and their qualifications and a review of the candidate's financial history. The onsite visit is typically for one or two days, depending on the size of the organization.

Step Three:   Subsequent to the completion of the onsite visit, the independent auditing firm prepares a report of its findings and conclusions, called the Assessment Package, for the CRC. If the independent auditing firm finds that the candidate's alignment with one or more of the 17 practices defined in the ASPPA Standard of Practice needs noticeable improvement, the independent auditing firm publishes an Opportunity for Improvement report (OFI). OFIs are submitted as they occur to the candidate. OFIs are also included in the Assessment Package provided to the CRC. OFIs serve as a useful tool for maintaining ongoing improvements in a recordkeeper's quality management system. The reporting of an OFI does not affect the CRC's certification decision. On the other hand, if the independent auditor finds that the candidate is in substantial non-conformance with one or more practices in the ASPPA Standard of Practice, then the independent auditor publishes a Non-Conformity Report (NCR). An NCR results in the suspension of the registration process until the NCR is cleared. The timeframe allotted by the CRC for candidates to clear NCRs is 90 days. If not resolved to the independent auditors' and the CRC's satisfaction within 90 days, then the registration process is terminated without certification.

Step Four:  The last step is that the CRC makes the final determination, and if the firm has satisfied the necessary requirements, CEFEX awards the ASPPA Recordkeeper Certificate.

The overall registration process typically takes four to six weeks, depending on the readiness of the candidate to provide the necessary materials and data.

MORE INFORMATION

Program information will be updated periodically on the ASPPA website, in The ASPPA Journal and via informational webcasts. Representatives will be available at ASPPA's larger conferences to discuss the program with you. You can also contact CEFEX, Centre for Fiduciary Excellence (www.cefex.org) or 416-401-8702.