Here are some frequently asked questions (FAQs) about the PIA Dimensions MFDA Portfolios℠ in the MEP™:
What are the new PIA Dimensions MFDA Portfolios℠* that are in the MEP™?
There are ten new model portfolios provided by Prudent Investor Advisors in the MEP™. Two of these portfolios are comprised of CDs and eight are comprised of stocks and bonds. The ten PIA Dimensions MFDA Portfolios℠ include:
PIA Dimensions CD Portfolio℠
PIA Dimensions
CD QFT Portfolio℠
PIA Dimensions Lower Funeral Inflation
Portfolio℠
PIA Dimensions Target Funeral Inflation Portfolio℠
PIA
Dimensions Higher Funeral Inflation Portfolio℠
PIA Dimensions Lower Funeral Inflation QFT
Portfolio℠
PIA Dimensions Target Funeral Inflation QFT Portfolio℠
PIA Dimensions Higher Funeral Inflation QFT Portfolio℠
MEP™ Program Enhancement:
PIA Dimensions Merchandise Inflation
Portfolio℠
PIA Dimensions Merchandise Inflation QFT
Portfolio℠
*The PIA Dimensions MFDA Portfolios℠
target the underlying Funeral Service Inflation Rates (Simple & Burial)
created and
maintained by The Foresight Companies,
LLC
How have the old Merrill Lynch funds been mapped over to – and replaced by - the new PIA MFDA portfolios?
Six of the old Merrill Lynch funds has been “mapped” over to their respective Prudent Investor Advisors model portfolio most similar to the old fund. This mapping process has resulted in all the old funds being replaced by the new PIA Dimensions MFDA Portfolios℠. Here is how the mapping was done:
Old Merrill Lynch Funds → New PIA Dimensions MFDA Portfolios℠
PreNeed CD → PIA Dimensions CD Portfolio℠
PreNeed CD QFT → PIA Dimensions CD QFT Portfolio℠
PreNeed Income
→ PIA Dimensions Lower Funeral Inflation Portfolio℠
PreNeed Income &
Growth → PIA Dimensions Target Funeral Inflation Portfolio℠
PreNeed
Growth → PIA Dimensions Higher Funeral Inflation Portfolio℠
PreNeed Income QFT → PIA Dimensions Lower Funeral Inflation QFT
Portfolio℠
PreNeed Income & Growth QFT → PIA Dimensions Target
Funeral Inflation QFT Portfolio℠
PreNeed Growth QFT → PIA Dimensions
Higher Funeral Inflation QFT Portfolio℠
MEP™ Program Enhancement:
PIA Dimensions Merchandise Inflation
Portfolio℠
PIA Dimensions Merchandise Inflation QFT
Portfolio℠
What are the two new enhancements that PIA has provided to the MEP™?
Two new enhancements to the MEP™
have been added by Prudent Investor Advisors to allow those Members who
are particularly concerned about the higher inflation rate associated
with the costs of funeral merchandise to invest in prudent model
portfolios:
PIA Dimensions Merchandise Inflation Portfolio℠
PIA Dimensions Merchandise Inflation QFT Portfolio℠
Are the new PIA Dimensions MFDA Portfolios℠ less risky than the old Merrill Lynch funds?
Yes. The new PIA Dimensions MFDA Portfolios℠ provided by Prudent Investor Advisors are less risky than the old Merrill Lynch funds. 80-90% of the value of the new portfolios is invested in fixed-income investments (i.e., bonds) and the balance – 10-20% - of the portfolios is invested in equities (i.e., stocks). The old Merrill Lynch funds were invested in much higher allocations of stocks.
What is the Risk Analyzer and what is its purpose?
Based on a few simple inputs made by a Member, the prepaid funeral contract risk analyzer generates an assessment and risk profile of a specific contract owner. It then provides a recommended model portfolio that is tailored to the contract owner to (hopefully) allow a Member to successfully mitigate his/her business risk of having to cover out-of-pocket shortfalls in the costs of future inflation-adjusted funeral products and services. A Member is not required to use the Risk Analyzer for any prepaid contract owner; the analyzer is simply a tool that a Member may use to determine the best PIA Dimensions MFDA Portfolio℠ to invest in for a particular contract owner. A Member has the right to accept, reject or ignore PIA’s recommendation, and he/she is solely responsible for the final selection of a model portfolio. PIA is not responsible for the accuracy of a Member’s inputs to the Risk Analyzer.
What is the goal of MFDA Members in the prepaid funeral contract program?
The fundamental, underlying business goal of MFDA Members when participating in the prepaid funeral contract program is to maximize the probability that they will successfully fulfill the future obligations of their contracts on an inflation-adjusted basis to avoid having to cover any shortfalls out-of-pocket.
What is liability-driven investing?
Liability-driven investing (LDI) is the process of investing and managing investments in order to satisfy future known liabilities. The PIA Dimensions MFDA Portfolios℠ in the MEP™ provided by Prudent Investor Advisors incorporate LDI. The future known liabilities of the MEP™ are substantially short-term in nature: 80% of prepaid contracts are performed within 5 years and 95% within 10 years. Given these factors, PIA employs the right kinds of investments - primarily short and intermediate, high quality fixed-income investments with a modest exposure to global stocks - to “match up” with these shorter term investment time horizons in order to satisfy the fundamental, underlying business goal of Members. Compared to mutual funds with meaningless labels such as “growth,” and “income and growth,” PIA’s menu of liability-driven, low cost model portfolios that diversify risk broadly and deeply, are relatively conservative.