The Veriphy Analytics Engine - What is it?
Veriphy Scores are decision-making tools that plan committees can use to help them anticipate the retirement readiness of their workforce. Veriphy Scores are built by evaluating every 401(k) plan as a unique plan with multiple asset class holdings over a period of time.
The performance (returns) of the plan investments overall are measured relative to their asset class benchmark returns. In addition, the Veriphy algorithms include a measure of the volatility embedded in each plan investment and these are compared to their respective benchmarks.
The combination of relative returns and relative risks delivers a measure of value added to a plan net of fees. This is something that fee benchmarking cannot deliver.
Measuring plan outcomes net of fees gives plan fiduciaries the feedback they need to make decisions that matter. It literally shows plan fiduciaries how well the plan has performed on a risk adjusted basis.
"To prove this point for oneself, you simply need to ask yourself … would anyone evaluate a business purely on the cost of goods. The answer is likely “no.” In addition, and more importantly, fees are measured in basis points. A basis point is 1/100th of a percent. Outcomes are measured in percentage points. A percentage point is 100 times larger than a basis point.
So, why does everyone want to measure fees? Well, it is easier. Measuring outcomes requires a significant amount of insight, understanding and math."