Gauge The Value

Understanding The Veriphy Score

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.  If the Veriphy Score is in the “red” then it is performing in the bottom 25% of the plans in our universe; if it is in the “green” then it is performing in the top 25%.

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. 

Click the gauge to download the Product Overview PDF

A basis point is 1/100th of a percent.  Outcomes are measure 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.

Learn how Veriphy® calculates and illustrates the Performance side of the equation by measuring the annualized return of the entire plan and comparing it to a neutral benchmark built specifically for each plan.  

Plan Risk and the Plan vs. Universe

The Veriphy Score - Like a FICO® Score

Topic: Veriphy® Analytics Learning #2 - Plan Risk, The Veriphy Score and the Plan Veriphy Score vs. Universe


Plan Risk 

This chart illustrates the Risk side of the equation by measuring the monthly volatility of the entire plan and comparing it to a neutral benchmark built specifically for each plan.  We will discuss the Comparison to the Universe measurement at the next update.
Plan Veriphy Score vs. Universe
This chart illustrates the Veriphy Score for entire plan and compares it to all the plans in the Veriphy database.  For organizations that wish, a custom universe can be created (i.e. industry specific, geography specific, company size specific, etc.)  We will discuss the Plan Statistics measurement at the next update.

Veriphy Score

Like a FICO™ score for your retirement plan
This is accomplished by measuring both the plan’s return and plan’s risk and comparing them to custom built benchmarks for each plan.  The Veriphy Score is that information represented in a single score.  If the score is positive then value has been added from the investment option in the plan.  If the Score is negative, then value has not been added.