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Item E01BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: November 19, 2003 Division: Management Services Bulk Item: Yes X No Department: Administrative Services AGENDA ITEM WORDING: Approval for County Administrator to sign"Guided Portfolio Services Program Plan Services Agreement" with Valic Financial Advisors, Inc. ITEM BACKGROUND: On April 19, 2000, the Board approved allowing The Variable Annuity Life Insurance Company (VALIC) as an alternative provider for a qualified deferred Compensation Plan to offer their plan to county employees. The Guided Portfolio Service is optional to the employee. The cost for financial planning services is .6% (six -tenths of one percent). All other Valic Services remain the same. PREVIOUS RELEVANT BOCC ACTION: Ordinance 037-1998 allows the County Administrator to negotiate with providers of deferred compensation plans. Currently we have 57 employees with $286,000 invested with Valic. CONTRACT/AGREEMENT CHANGES: New Service STAFF RECOMMENDATIONS: Approval TOTAL COST: None to_Counly if participant selects service they pay 6/10 of 1 % BUDGETED: Yes No COST TO COUNTY: None SOURCE OF FUNDS: REVENUE PRODUCING: Yes APPROVED BY: County Atty — DIVISION DIRECTOR APPROVAL: DOCUMENTATION: Included X DISPOSITION Revised 1/03 No AMOUNT PER MONTH Year OMB/Purchasing _Risk Management Sheila A. Barker To Follow Not Required AGENDA ITEM # MONROE COUNTY BOARD OF COUNTY COMMISSIONERS CONTRACT SUMMARY Contract with: Valic Financial Advisors, Contract # Effective Date: Upon Execution Expiration Date: Upon Cancellation Contract Purpose/Description: To provide Investment Services on through Valic's Guided Portfolio Services Program Plan. This is an optional service offered to employees. Contract Manager: Sheila Barker 4462 Mgmt. Svices. Stop 1 (Name) (Ext.) (Department/Stop #) for BOCC meeting on 11/19/03 Agenda Deadline: 11/04/03 CONTRACT COSTS Total Dollar Value of Contract: $ No Cost To Current Year Portion: $ County Budgeted? Yes❑ No ❑ Account Codes: N/A-------, Grant: $ N/A - - County Match: $ N/A - - ADDITIONAL COSTS Estimated Ongoing Costs: $ /yr For: Not included in dollar value above) e . maintenance, utilities, janitorial CONTRACT REVIEW Changes Date In Needed Division Director Yes❑ No0'�/�G Risk Management / & 103 Yes[:] No2--- O.M.B./Purchasing Yes❑ No[ County Attorney 101 A3 Yes�No � Comments: xviis rorm xevisea uz iiu i mur ifz etc Date Out 01 Y/o 3 i/- 51-03 VALIC FINANCIAL ADVISORS, INC. Guided Portfolio Services Program Plan Services Agreement © 2003 AIG VALIC, Houston, Texas www.aigvalic.com VL 15072 (3/2003) VALIC FINANCIAL ADVISORS, INC. Guided Portfolio Services Program PLAN SERVICES AGREEMENT This Plan Services Agreement (Plan Agreement) is entered into between you (Plan Representative, or You) and VALIC Financial Advisors, Inc. (VFA), a Texas corporation registered as an investment advisor with the United States Securities and Exchange Commission, for the investment advisory services program (Guided Portfolio Services Program) described in this Plan Agreement to participants in your employer -sponsored retirement plan or plans (Plan). 1. Investment Advisory Services Each Plan participant, beneficiary or alternate payee (as permitted under the Plan; hereinafter collectively referred to as "Participant") electing to have investment advisory services provided by VFA must complete the Investment Advisory Services Agreement (Participant Agreement), which describes the features of the program as well as the rights and responsibilities of the Participant under the program. By entering into this Plan Agreement, you acknowledge and agree that you have received and reviewed, and to the extent appropriate or necessary your legal counsel has received and reviewed, this Plan Agreement and the Participant Agreement, including the terms, conditions, and details of the Guided Portfolio Services Program described in those agreements, and that as a Plan Fiduciary: • By initialing below, You hereby select the Guided Portfolio Services Program and designate the following services to be offered and available to Plan participants: Portfolio Advisor Service: This service enables a Participant to obtain individualized advice, including individualized investment allocation recommendations from VFA, via an online program created for VFA which applies methodology developed, maintained and overseen by an independent financial expert, Ibbotson Associates, Inc. (Ibbotson). The recommendations will consist of model portfolios constructed by Ibbotson from the investment options selected by You or by another Plan representative (which does not include VFA), applied to the Participant's individual information and account. The advice is based upon a wealth forecast that takes into account not only the Participant's plan account values and contribution rates, but also, to the extent provided by the Participant and relevant to the forecast, other assets held by the Participant or the Participant's spouse or family member. The advice reflects the results of Monte Carlo simulations to determine the probable result of various account allocations, savings rates, etc. The Participant may elect whether to use this service, and if so, when and how often to use it. The Participant will be responsible for implementing any advice recommendations using the ordinary means available under the Plan, and for subsequent monitoring or review of the account and of the information utilized in arriving at the advice. Portfolio Manager Service: Under this service, a Participant requests that VFA exercise discretionary authority to allocate and reallocate his or her account, to implement individualized advice generated from a program created by Ibbotson, acting as an independent financial expert. The advice is the same as that provided under the Portfolio Advisor service. However, the advice is implemented by VFA. Initially and once each year thereafter, the Participant is given an opportunity to review and confirm the accuracy and completeness of the information upon which the advice is based, before the allocations or reallocations are implemented. For all other periods any reallocations are processed automatically following the end of a calendar quarter. Because the Participant is directing VFA to manage the account on his or her behalf, certain automatic transactions otherwise available under the account, such as contribution and account allocation and reallocation, either systematic or otherwise, will not be processed unless or until the Participant has terminated participation in the Portfolio Manager service. A Participant's request for such an allocation or reallocation may be interpreted as a direction to terminate the Portfolio Manager service for the Participant's account. X Both Services: Portfolio Advisor and Portfolio Manager VFA Financial Advisors will also provide plan investments and services, as separately selected by you or by another plan representative, including education services. • The Service(s) will be available for the following Plan(s): • If the Plan is subject to the requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA), you are designating VFA as a Plan Fiduciary solely for the provision of investment advice under this Agreement. Plan Services Agreement — Page 1!5 ON VALIC • You have determined that the compensation to VFA for services under the Guided Portfolio Services Program, taking into account any other compensation to VFA or its affiliates for investments and services provided to Plan accounts, is reasonable in light of the investment advisory services to be rendered. • You have designated, or you will designate, the individual investment products offered by VFA that will be available to participants under the Plan and under the Program and they are or will be listed in Appendix A to this Plan Agreement. In making such designation, you acknowledge and agree to any limits on the VFA-provided investment options to which the advice may apply, and to any limitations imposed by the investment option or by the Plan, provided that, except in the case of Plan limitations, such limitations have been disclosed to you prior to making such designation. • You will receive regular periodic summaries of the performance of the underlying Plan investment options used in the Guided Portfolio Services Program, including rates of return, as well as periodic information regarding the fees assessed by the underlying investment option and the fees assessed for the Guided Portfolio Services Program. 2. Status of Plan VFA or an affiliate may be providing additional services, including investment, plan recordkeeping, plan compliance, and other related plan administrative services. However, the Plan Representative retains the responsibility for ensuring the qualification of the Plan. If the Plan is subject to the requirements of ERISA, the Plan Representative must be a Plan Fiduciary. 3. Prohibited Transactions If the Plan is described in section 401(a) of the Internal Revenue Code (Code), or if the Plan is subject to the requirements of ERISA, certain types of transactions are prohibited, including, generally, the provision of investment advice by an entity or an individual that is providing other services to the Plan for compensation. VFA cannot provide tax or legal advice to you or to the Plan. The United States Department of Labor ("DOL") has issued Advisory Opinion 2001-09A ("Advisory Opinion") to SunAmerica Retirement Markets, Inc. ("AIG SunAmerica"), a sister company of VFA. The Advisory Opinion provides that investment advice that is based on a computer program controlled by an independent financial expert ("IFE") and delivered to a Participant by an organization or advisor that is also providing plan investments from which it receives income, will not constitute a prohibited transaction if certain requirements are satisfied. The Advisory Opinion was issued by the DOL in response to a request for a prohibited transaction exemption ('PTE") by AIG SunAmerica. The AIG SunAmerica PTE request identified Ibbotson as the IFE for the AIG SunAmerica program. AIG SunAmerica, Inc. and VFA have entered into an agreement with Ibbotson to provide the services described in AIG SunAmerica's PTE request and in the Advisory Opinion. A VFA financial advisor(s) will be, or is already, providing services to your Plan, which may include enrollment and contribution processing, plan recordkeeping and compliance, education, and other services. Based upon your selections above, VFA will also provide investment advisory services. As described above, VFA will provide advice under the Portfolio Advisor service through an online program that the Participant may use at any time the system is available, and as frequently as desired. VFA will provide advice under the Portfolio Manager service through a VFA Investment Advisor Representative (Facilitator). The Facilitator will continue to provide many of the same plan and investment services to the Plan that he or she would otherwise provide, in the absence of the selected investment advice services. However, pursuant to the Advisory Opinion, the Facilitator will present the advice exactly as it has been determined under the computer program developed by Ibbotson, and may not alter that advice or provide other investment advice. 4. Investment Advice Process From the investment options that you select to be available to Plan participants, Ibbotson will select the funds to be included in the model advice portfolios under the Guided Portfolio Services Program. The list of funds selected by Ibbotson will be attached hereto as Appendix B. (You will be notified by VFA if the investment options you select fail to include one or more asset categories required by the Ibbotson portfolios.) If advice is being provided for a Participant's accounts in multiple plans, or for multiple accounts on separate recordkeeping systems under a single plan, the advice will be provided separately for each such plan or account. On an ongoing basis Ibbotson will monitor the asset -class portfolios and the individual investment options included in the advice portfolios, and make changes to either or both as appropriate. With certain exceptions, any such changes will generally occur not more frequently than quarterly. For purposes of either the Portfolio Advisor or the Portfolio Manager service, each Plan participant selecting the program will be assigned to one of a fixed number of model portfolios based upon the information provided to VFA by the Plan or by the Participant. As described in the Participant Agreement, a minimum set of data items will be required in order to assign the Participant to a model portfolio. They include: gender, date of birth, state of residence, annual earned income, current annual plan savings rate, employment date, number of dependents, desired retirement age, and desired retirement need (% or $). Additional information can be provided, by the Plan or the Plan Services Agreement — Page 2/5 EM VALIC Participant, to further assist in selection of the appropriate portfolio, including additional information about the Participant and/or the Participant's spouse and/or family, if applicable. This additional information can include (but is not limited to): Outside Plan Assets: Account Type; Account Name; Annual Contribution $; Annual Contribution %; Fund Name; Ticker/SymboUCUSIP; Qty/# of Units; Market Price per Share; Cost Basis per Share; Market Value; Cash; Stock Option Grant Year; Vest Year; Qualified; Asset Class; Qty; Strike Price; Underlying Price; Expiration Year; Cash Equivalents; Other Assets Liabilities: Loan ID; Effective Date; Maturity Date; Balance; Repayment Amount; Interest Rate; Repayment Frequency; Loan Name; Loan Start Date; Loan End Date; Loan Payment; Interest Rate; Appraisal Value Cash Flow: Cash Flow Type (income or expense); Begin Date; End Date; Amount; Premium over Inflation (%); Adjust for Inflation (now, later, no); College Cost Begin Year; College Cost End Year; Type of School; Cost Benefits/Retirement Information: Pension Description; Start Age; Inflation Premium; Pension Monthly Payment; Inflation Adjust; Social Security Description; Monthly Estimate ($); Age to Collect; % Reduction About Your Spouse: First Name; Last Name; Date of Birth; Number of Dependents; Gender; Annual Savings Rate $; Annual Savings Rate %; State of Residence; Employment Date; Annual Salary; Retirement Age; Retirement Needs $; Retirement Needs %; Pre -Tax Match Calculation %; Max Pre -Tax % Saved; Dollar Cap for Pre -Tax Match; Max Pre -Tax Employee Svgs Rate; Company Stock Match Pre -Tax %; Profit Sharing Match Pre -Tax %; Employer Profit Sharing %; Post -Tax Match Calculation %; Max Post -Tax % Saved; Dollar Cap for Post -Tax Match; Max Post -Tax Employee Svgs Rate; Company Stock Match Post -Tax %; Profit Sharing Match Post -Tax %; Other Employee Match % Assets: Account Type; Account Name; Annual Contribution $; Annual Contribution %; Fund Name; Ticker/SymboUCUSIP; Qty/Units; Market Price per Share; Cost Basis per Share; Market Value; Cash; Stock Option Grant Year; Vest Year; Qualified; Asset Class; Qty; Strike Price; Underlying Price; Expiration Year; Cash Equivalents; Other Assets Plan participants will be permitted to enroll in the Guided Portfolio Services Program at any time, provided however that, in the case of a Plan participant electing the Portfolio Manager service, if the Participant previously terminated the service with respect to a Plan, he or she must wait at least twelve months before re -enrolling in the service for that Plan. Upon enrollment in the Portfolio Advisor service, the Plan participant may use the online advice service as often as desired, in the manner (and subject to any limitations) described in the Participant Agreement. A Plan participant enrolling in Portfolio Manager will receive a statement summarizing the data provided to VFA that will be used to fonnulate the advice, and will be given an opportunity to correct or modify that data before the service is initiated. Thereafter, the Participant can revise, add, or change his or her data at any time during VFA's normal operating hours, and he or she will also receive a summary of his or her data in a quarterly advice statement. The Participant enrolled in the Portfolio Manager service will be further contacted at least once per year, and may ask to speak with a VFA Facilitator at any time. A comprehensive review of Portfolio Manager accounts will be performed annually by Ibbotson, and the accounts will be rebalanced quarterly if thresholds established by Ibbotson are exceeded. Participants are responsible for contacting VFA with any new or revised information that might warrant an additional review and/or rebalancing of the account. Allocations or reallocations may be limited by the Plan or by the underlying investment. Such limitations will be taken into account by Ibbotson in the development and implementation of the advice. 5. Cost Assessed to Participant Accounts For Portfolio Manager, the cost assessed to Plan Participant accounts is reflected in the enclosed Fee Schedule. The cost will be applied to the account of each participant not less than 6 and not more than 15 days following the end of a calendar quarter. The cost will be calculated as a percentage of account value and applied to the account as a fixed dollar amount, as described in the Participant Agreement. For Portfolio Advisor, a fixed annual fee will be charged to the Participant's account following enrollment, and will entitle the Participant to use of the service for one year. At the end of that year, and each succeeding year for which the advice is initiated or continued, the Participant will be required to re -enroll in order to continue receiving the service. Plan Representative hereby directs that these costs be withdrawn from Participant accounts as an expense of the plan. You will be provided at least 90 days advance written notice of any change in the rate of fees assessed to Participant accounts. Fees will be assessed to Participant accounts on a pro-rata basis among investments. 6. Cost Assessed to Plan Sponsor You are responsible for an annual fee of $ related to the portfolio construction, monitoring, maintenance, and reporting performed by lbbotson under the Guided Portfolio Services Program. You will be sent at least 90 days advance written notice of any change in the rate of fees assessed to the Plan. Circle one: 'Standard Portfolio Set �ustom Portfolio Set Plan Services Agreement — Page 3/5 M VALIC 7. Term and Termination of Guided Portfolio Services Program This Agreement will become effective on the last signature date hereof, and will remain in effect from calendar quarter to calendar quarter until otherwise terminated. A termination will be effective with respect to all plans identified in this Agreement unless otherwise specified by You and agreed by VFA following provision of not less than 90 days advance written notice, provided however that some or all of the notice period may be waived upon a demonstration that only an earlier termination will comply with the independent Fiduciary's fiduciary duties. You or another authorized Plan Representative may terminate the services at any time for all Plan participants, subject to a reasonable advance written notice requirement consistent with applicable law. Such termination shall be effective as soon as reasonably practicable thereafter. A Plan participant may terminate the Portfolio Manager services with respect to his or her account, subject to a reasonable advance written notice requirement consistent with applicable law. Such termination shall be effective as soon as reasonably practicable thereafter. VFA may terminate the Portfolio Manager services to the Plan, including all participants thereunder, by not less than 90 days advance written notice to the Plan and to each Plan participant that is enrolled in the Guided Portfolio Services Program. 8. Notice Any notice permitted or required under this Plan Agreement shall be provided as follows: Notice to Plan Representative: MoAI,eoE 600Ai7-y �DCG G�J CO✓n�r�/ /40miNiSTCATOR.I //OU SUM O NTOIld -->7',erET� je'�5 GlJ iE5S T IC L 3 3 8 y O Notice to VFA: VALIC Financial Advisors, Inc. Guided Portfolio Services Program c/o Advisory Services Team 2929 Allen Parkway Houston, Texas 77019 9. No Guarantee You understand, acknowledge and accept that the advice provided hereunder relies on historical performance and other data, all of which have limitations. Past performance of investments is no guarantee of future results. The analysis and advice provided depends upon a number of factors, including the information provided, various assumptions and estimates and other considerations. As a result, the wealth forecast developed and advice and recommendation provided are not guarantees that a Plan participant will achieve his or her retirement goals or anticipated returns. You understand that there remains a risk of loss within variable investment options. i o. Form ADV Part 11 of VFAs Form ADV, the registration document filed with the United States Securities and Exchange Commission, contains additional information about the advice VFA will provide. By entering into this Agreement, you represent that you received and reviewed a copy of Part 11 of VFAs Form ADV. 1 1. Limitation of Liability The use and storage by the Plan or a participant of any information including, without limitation, account numbers, passwords, identification, portfolio information, account balances and any other information available on an employer's or a participant's personal computer is the sole risk and responsibility of the employer and/or the participant. VFA is not responsible for providing and maintaining the communications and equipment (including personal computers and modems) and telephone or alternative services required for accessing and utilizing electronic or automated services, or for communications service fees and charges incurred by the Plan or a participant in accessing these services. You understand and agree that there is no guarantee that the recommendations generated by VFA or pursuant to the computer program developed by lbbotson will be successful. You acknowledge that the outcome of the Guided Portfolio Services Program's calculations are estimates only, and there is no guarantee of the future financial performance of your investments or that you will meet your desired goal(s). You agree, understand, and acknowledge that we are basing our advice on the responses provided and other information furnished to us through the Advice Program and updated as necessary. We shall not be liable for any misstatement or omission contained in the information furnished to us, or any loss, liability, claim damage or expense whatsoever arising out of or attributable to such misstatement or omission. 12. Assignability This Agreement shall not be assignable by any party without the prior written consent of the other party. 13. Extraordinary Events We shall not be liable for loss caused directly or indirectly by governmental restrictions, exchange or market rulings, suspension of trading, war, strikes, or other conditions beyond our control. We shall not be responsible for loss or damages caused by equipment failure, communications lines failure, Plan Services Agreement — Page 4/5 RM ♦ALIC unauthorized access, theft, systems failure and other of the information. consequences beyond our control. 15. Separability 14. Privacy Protection of Nonpublic Personal Information. VFA is subject to various privacy requirements for the protection of its clients under the Gramm -Leach -Bliley Act ("Act") and regulations promulgated pursuant to the Act. Definition of Nonpublic Personal Information. Nonpublic personal information ("NPI") of customers or consumers includes, but is not limited to, names, addresses, account balances, account numbers, account activity, social security numbers, taxpayer identification numbers, and sensitive financial and health information. NPI includes information on our forms or in a database of any kind, information created by us, information collected by or on behalf of us and personally identifiable information derived from NPI. Disclosure and Use of NPI. All NPI that VFA obtains as a result of this relationship shall not be used, disclosed, reused or redisclosed to any unaffiliated third party, except to carry out the purposes for which the information was disclosed. All NPI shall be held in confidence to the same extent and in at least the same manner as VFA protects its own NPI, but in no case in a lesser manner than a reasonable degree of care under the circumstances. VFA shall be permitted to disclose relevant aspects of the NPI to its officers, agents, subcontractors, independent financial expert and employees only to the extent that such disclosure is reasonably necessary for the performance of its duties and obligations under the Agreement; provided that VFA shall take all reasonable measures to ensure that the NPI is not disclosed or reproduced in contravention of the provisions of this Section by VFA officers, agents, subcontractors, investment subadvisors and employees. The obligations of this Section shall not restrict any disclosure by VFA pursuant to any applicable state or federal laws, or by request or order of any court or government agency (provided that the disclosing party or parties in order that any other party will have a reasonable opportunity to oppose the disclosure, request or order). The obligations of this Section shall not apply to information which, without breach of obligation of confidentiality: (1) is independently developed by us; (2) is or becomes publicly known; (3) is already known by us as evidenced by the written records; or (4) is obtained from an independent source. Security of NPI. VFA further agrees to establish and maintain policies and procedures designed to ensure the confidentiality and security of NPI. This shall include procedures to protect against any anticipated threats or hazards to the security or integrity of the information and unauthorized access to or use If any provision or condition of this Agreement shall be held to be invalid or unenforceable by any court or regulatory or self - regulatory agency or body, such invalidity or unenforceability shall attach only to such provision or condition. The validity of the remaining provisions and conditions shall not be affected thereby and this Agreement shall be carried out as if any such invalid or unenforceable provision or condition were not contained herein. 16. Entire Agreement; Governing Law This Agreement represents the entire agreement between the parties with respect to the subject matter hereof and may not be modified or amended except in writing signed by You and VFA. It shall be governed by and construed and enforced under the Laws of the State of_TVes! f'Y 0,V / LM . Date Plan Representative Signature Second Signature If Required Date Authorized VALK Financial Advisors, Inc. Signatory Title Plan Services Agreement — Page 515 ' ! VALIC Guided Portfolio Services Portfolio Manager Service - Participant Fee Schedule Annuity Accounts Participants in the Portfolio Manager service will pay a fee to VFA for this service. This fee is in addition to any fees and charges imposed by the VALIC annuity product. This fee will be calculated at each calendar quarter end and will be assessed within six to fifteen (6-15) days after the end of such calendar quarter. You will have six calendar days from the day the Investment Policy Statement is issued to terminate from the Guided Portfolio Services program without incurring a fee. After this six -day period, you will incur at least one calendar quarter's fee. We will not assess a fee in a calendar quarter that you opt out of this service or take a total distribution from your Account. Any change to the above fees will apply no sooner than 90 days following the mailing of notice of the change to the plan sponsor to you. VL XXXXX (3/2003)