For over 15 years, federal bank agencies have issued guidance* outlining supervisory expectations for the purchase and risk management of BOLI. Safe and sound business practices recommended for banks and savings associations emphasize the joint responsibility of senior management and the board of directors to:
• Conduct a thorough pre-purchase analysis of risk and rewards
• Perform very careful due diligence on the BOLI vendor
• Regularly schedule a post-purchase risk assessment
The complexity of BOLI, risks associated with its use, and legal and compliance requirements make it imperative for both senior management and the board to completely understand the product and to carefully select a seasoned and reliable vendor. The assessment that follows is a proactive way to review important considerations when assessing a vendor and to determine how M Benefit Solutions’ services and expertise compare with other third parties.
BOLI’s importance as an offset for employee benefit programs has the ongoing attention of leading organizations, but its complexity has raised the concern of federal banking agencies, which have periodically issued risk management guidance to consider and implement when making BOLI purchases.
The spotlight on BOLI makes it important to choose the right vendor with products and services, expertise, industry experience and integrity. A third-party partner such as M Benefit Solutions puts these importantattributes to work for clients, who need first-rate employee benefit programs to attract and retain the best talent in an extremely competitive market.
Now that you understand the essential attributes a BOLI vendor should possess and M Benefit Solutions’ approach, this vendor audit checklist will help you select the best vendor to design, implement and administer your BOLI and executive benefit plans.
* The Interagency Statement on the Purchase and Risk Management of Life Insurance (OCC 2004-56) dated December 7, 2004 and the Office of the Comptroller of the Currency (OCC) Bulletin 2013-29 dated October 30, 2013. This material is not intended to, and does not, present an opinion or advice with respect to accounting, legal, or tax matters. Please consult with your accountant, attorney, or tax advisor, as applicable. Securities offered through M Holdings Securities, Inc., a Registered Broker/Dealer, Member FINRA/SIPC. #3220415.1 M Benefit Solutions and M Holdings Securities, Inc. are affiliated companies.