one of their biggest fears running ou t of money in

1 American Bene ts Council. 401(k) Fast Facts. June 2013. h p://www.americanbene tscouncil.org

products trad itional annuities and guaranteed minimum withdrawal benefit features is to offer

retires. On the first issue how much replacement income is adequate many observers use 75-80% of final pay as a

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The replacement income issue:

See, for example, Workforce Management and Retirement in a 401(k) World , Watson Wya Insider (September 11/ 2007). See, Cantore, Tara, MetLife Finds Too Many Pre-Retirees with

Faulty Math, Plan Adviser (October 2011) See Allianz RFI Response, at page 4.See, for example, Aon Consulting, Aon Consulting/Georgia State

2008 University Replacement Ratio Study.

Longevity:

Withdrawal rates:

Ination risk.

6 Reish, Fred , Ashton, Bruce and Byrnes, Pat, The Problem with Living Too Long, Institutional Retirement Income Council (2010), h p://www.iricouncil.org/docs/The%20Problem%20With%20Living%20Too%20Long.pdf. . . For more recent information, see Society of Actuaries, Exposure Dra, RP-2014 Mortality Tables, February

7 One recent study showed that more than 33% of those interviewed had no idea how much they could safely withdraw and roughly 25% expected to be able to withdraw more than 10% of their retirement savings each year. See, Lee Barney, American All Over the Map on Retirement Drawdown Rates, Money Management Executive (October 13, 2011).8 William P. Bengen, Determining Withdrawal Rates Using Historical Data, Journal of Financial Planning, October 1994, pages 171-180. . . Some more recent stud ies have suggest that a 3% withdrawal rate is more appropriate in the investment environment of the rst decades of the twenty- rst century. . .

Cognitive risk:

Investment or sequence-of-returns risk:

2000s. The risk arises when a retiree takes withdrawals which are necessary to pay his living expenses from a

9 See Allianz of America, Behavioral Finance and the Post-Retire-ment Crisis (A Response to the Department of the Treasury/Depart-ment of Labor Request for Information Regarding Lifetime Income Options for Participants and Beneciaries in Retirement Plans), prepared by Prof. Shlomo Benartzi, UCLA, at page 9 (April 29, 2010) (the Allianz RFI Response); see also BMO Retirement Institute, Financial decision-making: Who will manage your money when you cant?, Ju ly 2011, which reached similar conclusions based on stud ies of the Canadian population.

See, David Laibson, Cognitive Impairment: Precipitous Declines in Cognition Can Set the Stage for Poor Decisions About Retirement Finances, which appears in the Allianz RFI Response, h p://www.dol.gov/ebsa/pdf/1210-AB33-617.pdf. . . Professor Laibsons research showed a signi cant decrease in analytic cognitive functioning as people age and that older adults make nancial mistakes. In e ect, older people are less able to make cogent nancial decisions, to analyze nancial data and properly consider risks, which suggests that they are less able to make sound decisions about their nancial security once they reach their 80sa point when they may live another 10 or more years. . .

11 ERISA 404(a)(1)(A).12 ERISA 404(a)(1)(B)

Id. . . Emphasis added .

should

14 29 C.F.R. 2550.404.a-1(b)(1).See, generally, Riley v. Murdock, 890 F.Supp . 444, 458 (E.D.N.C.

1995). See, generally, Fink v. National Savings and Trust Company,

F.2d 951, 962 (D.C. Cir. 1984). Katsaros v. Cody, 744 F.2d 270, 279 (2d Cir.1984); cert. denied

sub nom, Cody v. Donovan, 469 U.S. 1072, 105 S.Ct. 565, 83 L.Ed.2d 506 (1984). 18 ERISA Regulation Section 2550.404a-1(b).

19 ERISA Regulation Section 2550.404a-4(b)(1) and (4). . . The regulation relates only to the selection of an annuity provider in a de ned contribution plan, but the precepts in the rule may be applicable to the selection of a GWB product by analogy.

20 Mungan, Kenneth P. The 6% Rule: Determining Portfolio Withdrawal Rates using Stochastic Analysis and Managed Risk Equities. Milliman.com/insight. September 14, 2014. Milliman, Inc.

21 Dalbar, Inc. 2013 QAIB Quantitative Analysis of Investor Behavior. March 2013. Dalbar, Inc. 22 Mungan, Kenneth P. Performance of Insurance Company Hedging Programs During the Recent Capital Market Crisis. Milliman.com/insight. December 1, 2008. Milliman, Inc.

* The backtest is based on a $100,000,000 investment from 1/1/2000 to 12/31/2013. The S&P 500 is an unmanaged index that is not available for direct investment. The returns for the S&P 500 Investment and the Managed Risk S&P 500 Investment both include a 1% fund management fee but do not include taxes, sales charges, or any other expenses. The rates of return are hypothetical historical illustrations and do not represent the returns of any particular investment portfolio. There is no assurance that the investment process will consistently lead to successful investing.

* The backtest is based on a $100,000,000 investment from 1/1/1990 to 12/31/1999. The S&P 500 is an unmanaged index that is not available for direct investment. The returns for the S&P 500 Investment and the Managed Risk S&P 500 Investment both include a 1% fund management fee but do not include taxes, sales charges, or any other expenses. The rates of return are hypothetical historical illustrations and do not represent the returns of any particular investment portfolio. There is no assurance that the investment process will consistently lead to successful investing.

* The backtest is based on a $100,000,000 investment from 1/1/1990 to 12/31/1999. The S&P 500 is an unmanaged index that is not available for direct investment. The returns for the S&P 500 Investment and the Managed Risk S&P 500 Investment both include a 1% fund management fee but do not include taxes, sales charges, or any other expenses. The returns for the Hypothetical Investment (2.5% per year) do not include fees, taxes, sales charges, or any other expenses. The rates of return are hypothetical historical illustrations and do not represent the returns of any particular investment portfolio. There is no assurance that the investment process will consistently lead to successful investing.

savedneed

24 Source: United States Census Bureau, Net Worth and Asset Ownership of Households: 2011, Table 4. Percent Distribution of Household Net Worth, by Amount of Net Worth and Selected Characteristics: 2011, h p://www.census.gov/people/wealth/

The Sequence of Returns E ect

25 In this example, if the investor starts with $100, the investment will increase to $150 (a 50% increase) and then fall to $75 (a 50% decrease).26 Russell Kinnel, Morningstar, 4/16/2013, Why Investors Lag the Returns of Their Funds: Volatility proves challenging for many shareholders, h p://www.morningstar.com/advisor/t/73663027/why-investors-lag-the-returns-of-their-

Appendix B-2: E ects of Volitility

With the Standard & Poor s 500-stock index near an all-time high, its worth considering how investors in stock mutual funds have fared in the market rally that began more than 4 years ago. Not so great, according to latest Quantitative Analysis of Investor Behavior study by Dalbar Inc. Fund investors have signi cantly underperformed the S&P 500 over the past 3, 5, 10 and 20 years. While average stock fund investors d id almost match the S&P 500s 16% total return last year, they lagged the index by nearly 4 percentage points per year from 1993 to 2012.

27 Tom Anderson, Forbes, 3/28/2013, Fund Investors Lag As S&P 500 Nears All-Time High, h p://www.forbes.com/sites/tomanderson/2013/03/28/fund-investors-lag-as-sp-

This analysis is based on S&P 500 returns from 1/1/2000 to 12/31/2013. The S&P 500 is an unmanaged index that is not available for direct investment. The returns do not include fees, taxes, sales charges, or any other expenses.

Even Keel Managed Risk Fund this fund

Fund This fund uses U.S. small and mid-

This fund uses developed international

Even Keel Explorer Managed Risk Fund

28 Product descriptions may be found at www.evenkeelinvestments.com/#products.