Investment Advice
We will act as a fiduciary as it relates to the investment services provided to your plan, which means we commit to providing guidance and advice solely in the best interest of plan participants and their beneficiaries. Leverage our 3(21) service co-fiduciary model. Or you can choose to offload many of those responsibilities to help mitigate your risk by engaging us through our 3(38) service model.
The Employee Retirement Income Security Act (ERISA) requires plan sponsors to act prudently when making decisions relating to the management or administration of the plan. These "fiduciary functions" must be performed solely in the interests of plan participants and beneficiaries, with the exclusive purpose of providing benefits, while defraying reasonable expenses. In addition, when it comes to selecting investment options, plan fiduciaries have a duty to diversify investments and defray reasonable expenses.
There is a measure contained in section 404(a)(1)(B) of ERISA that requires the fiduciary of a defined contribution retirement plan to use "care, skill, prudence and diligence", and to act in the same way that someone "familiar with such matters" would act. The "familiar with such matters" language has often been interpreted to mean "expert." This language creates an important distinction from earlier prudent person guidelines, in
that it holds fiduciaries to a stricter standard.
A lack of familiarity with investments will not be excused as a reason for not fulfilling fiduciary duties. If fiduciaries are unsure what to do, they are encouraged to retain professional advisors to make recommendations. Advisors can take many forms and offer different types of fiduciary support.
ERISA permits plan fiduciaries to delegate day-to-day responsibility for selecting all or a portion of the plan's investments to an "investment manager" If properly appointed and monitored, the fiduciaries will not be liable for managing those investments over which the investment manager exercises discretion.
In addition to the liability protection offered, fiduciaries are looking for ways to reduce work and cost on their plan. An effective investment manager can help outsource the day-to-day employer duties and responsibilities, and make sure that investments lineups are cost-effective, prudent, diversified, and competitive.