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Corporate Retirement Planning

Let's make retirement work for you.

Our digital retirement platform was built with one concept in mind: making it easier for companies, associations and institutions to offer and administer quality plans regardless of size.

Transparent, streamlined and fully customizable, we take on the heavy lifting so that you can stay focused on what you do best. 

It’s time to simplify your administration, reduce risk, help your team save, and sleep well at night.  

Whether it’s a 401(k), 403(b), Profit Sharing or Defined Benefit Plan, we have the technology and skill to provide a tailored and cost-effective solution for your business, association or institution. Our platform partners have received awards in innovation and technology as we uniquely provide the following features and benefits: 

 Fiduciary Oversight & GovernanceStreamlined Administration & Participant Education
Seamless Integration with your PayrollCustomizable Plan Design
Low-cost and Diversified Investment OptionsModern Platform Experience
Full Transparency & Dedicated SupportCorporate Cash Management Solution

Our Corporate Retirement team is proud to provide our innovative solution to tailor and enhance your corporate retirement plan.

It's time to make a better

retirement plan.

Learn more

Individual Equity Selection

In order for Traphagen to invest in an individual equity we must be convinced of 3 things:

  1. The company is in excellent financial health (strong balance sheet, manageable debt levels, strong return of cash flow to shareholders)
  2. Longer term future earnings/cash flows can be estimated with an above average level of confidence (highly cyclical, leveraged, or small companies are rarely bought). Preferred companies have very steady, well defended, and predictable earnings/cash flows.
  3. Current stock price is below our estimate of fair value (providing a margin of error) and also represents a superior risk-adjusted return versus owning a diversified market index ETF.

Traphagen estimates a securities fair value by utilizing our custom ‘conservative discounted cash flow’ model.

  • We take a conservative estimate of ‘sustainable cash flow’ (which smoothes out booms and busts in corporate earnings) and then project conservative sustainable growth into the future. We apply a 10% discount rate for most securities (which is the return that we demand for owning the stock) and this generates our fair value estimate. We then set sell and buy targets for each security and invest appropriately.

The below graph depicts what our cash flow model would have predicted as fair value for Apple stock through time beginning in 2010. Our estimated fair value for Apple is represented by the ‘hold zone’ on the graph which increases through time as the absolute value of free cash flows available to shareholders increase. At any time if the actual stock price rises above this ‘hold zone’ we would be active sellers of the stock and any time it falls below we would be active buyers. We employ this same strategy for all individual securities we purchase.

Sector Rotation

Strategic US Equity Sector Over Weights / Under Weights

One of the largest determinates of investment returns within US equities is the investors allocation among industry sectors. Traphagen actively looks to overweight sectors that we feel will outperform the general market and underweight sectors that will underperform on a continuous basis. This provides superior risk adjusted returns versus simply holding the S&P 500 index.

Traphagen monitors the below 4 metrics on all 9 major S&P 500 industry sectors throughout the year:

  • Recent sector performance relative to the S&P 500 / mean-reversion performance
  • Absolute valuation of sector equity basket
  • Relative valuation of sector equity basket versus the S&P 500 (relative P/E comparison)
  • Fundamental industry view in relation to overall business cycle and other sector variables 
  • Using a proprietary metric weighting model Traphagen determines a ‘sector score’ for each sector. If the score is above (below) certain levels we will overweight (underweight) the sectors(s) within our US Large Cap Equity Allocation.
  • At all other times sectors will be market-weighted

S&P 500 Sectors & Examples of Recent Traphagen Over/Under Weights

  • Consumer Staples (Proctor & Gamble, Kraft Foods, Wal-Mart)
  • HealthCare (Medtronic, United HealthCare, Pfizer)
  • Consumer Discrnty. (Nike, Starbucks, Amazon)
  • Technology (Apple, Microsoft, Intel)
  • Industrials (General Electric, Caterpillar, Deere)
  • Utilities (Con Ed, Southern Company, PG&E Corp.)
  • Financials (JP Morgan, Wells Fargo, Bank of America)
  • Energy (Chevron, Exxon Mobil, Schlumberger)
  • Materials (Monsanto, Newmont Mining, Alcoa) 
  • Financial Underweight Jan 2011 – Jan 2012: +19.1% Return Differential
  • Utility Underweight Jan 2011 – Oct 2011: +14.8% Return Differential
  • Healthcare Overweight Jan 2011 – May 2011: +9.7% Return Differential
  • Consumer Staples Overweight Jan 2011 – Dec 2011: +12% return Differential

Dynamic Asset Allocation

Every year in depth research is completed which encompasses general capital market assumptions and asset class specific return, risk, and correlation estimates. Using this research as our foundation the investment committee establishes estimates for shorter term  (1 year) and longer term (10 year) returns for each asset class. More weight is given to the 10 year return estimates as historically these have been more reliable than shorter term return forecasts.

Once we have our estimates for asset class returns, risk, and correlations we run a ‘mean variance optimization’ (MVO) model which optimizes our allocation to every asset class given a set level of risk (measured by standard deviation).  This risk level is governed by your investment objective (risk ranges from a SD of 4.5% for Stable Value Fixed Income to a SD of 18% for Aggressive Growth).

Most traditional managers employ a static asset allocation and periodically rebalance. This actually decreases or increases risk and return potential as asset class valuations and correlations change over time.

As prudent managers it is our job to maximize return with a constant level of risk, and this is what ‘dynamic asset allocation’ accomplishes.

Cost/Fee Minimization

Traphagen believes keeping investment fees to an absolute minimum is essential to delivering long term superior investment returns.

This is one aspect of investment management that we have complete control over and therefore we look to take full advantage (where possible) of the lowest cost products available. Through our partnership with Fidelity and Schwab we are able to buy/sell many very low cost ETFs (Exchange Traded Funds) for no commission charge. These ETFs enable us to invest in a wide range of asset classes for very lost cost (as low as 0.07% per year vs. traditional mutual funds that could have fees as high as 1.5% or more per year).

For every $200,000 invested approximate fee savings of $1,000 per year is realized when comparing our portfolios with a 100% traditional mutual fund portfolio (assuming 0.425% average fee for our portfolio vs. 0.925% with an all mutual fund portfolio). It should be noted this savings is realized year in and year out regardless of market returns.

There are certain asset classes and investment strategies where no ETFs are available and therefore some traditional mutual funds remain an important part of our client portfolios. 

Tax Loss/Gain Harvesting

We constantly monitor client portfolios for the opportunity to ‘harvest’ tax losses or gains for federal and state income tax purposes. This is the process by which we will actively sell one position to recognize a loss or gain (depending on what exactly we are trying to accomplish) and then immediately replace the original position with an near identical position. This captures the loss or gain (which defers or eliminates income taxes) while not affecting your overall investment exposure.

Again this is something we have control over, so Traphagen invests a lot of time and effort monitoring portfolios for possible harvesting opportunities.

Asset Location

Traphagen pays special attention to Asset Location between accounts to maximize tax efficiency. We ‘overweight’ tax efficient assets in taxable accounts, while using tax deferred accounts to house tax inefficient assets. This results in greater ‘after-tax’ returns as a result of deferring or avoiding taxable income/gains.

As the above graphic depicts we use IRAs to house high yielding assets. This includes most bonds and real estate. We can use these accounts to shield these cash flows from immediate taxation. In some cases we can permanently eliminate taxation on the income generated from these assets if allocated to a Roth IRA. Most equities, commodities, and all municipal bonds are held in taxable accounts. Most equities and commodities produce relatively low cash flow (and if they do it is normally qualified income) while municipal bonds produce no federal taxable income.

If executed correctly this ‘asset location’ strategy can add between 0.2% and 0.4% per year to after tax returns regardless of market returns.