Losing Sleep Due to Fiduciary Responsibility?
Given today’s tumultuous market, it’s no wonder that insomnia plagues those who have fiduciary responsibilities for their company’s retirement plan. Fiduciary responsibilities can be daunting even in a calm environment; this constant upheaval brings an additional complexity to an already complicated role. It’s no surprise, then, that plan fiduciaries may be counting a lot of sheep.
The best way to ensure a good night’s sleep is for plan fiduciaries to understand and fulfill their responsibilities under the Employee Retirement Income Security Act (ERISA) and the Department of Labor (DOL) by (1) abiding to a stringent fiduciary process and (2) partnering with a retirement plan advisor. Here are a few items that should be addressed regarding your plan fiduciary responsibility.
Understand ERISA and DOL Regulations
ERISA and the DOL establish the rules for fiduciaries and investment plan fiduciaries. One of the rules, “404(c),” can assist fiduciaries in reducing or eliminating liability for losses on participant-directed investments. Following 404(c) includes but is not limited to communicating with plan participants, allowing participants to have control over their investments, and providing investment diversification opportunities.
Processes and Due Diligence
Due diligence includes developing an Investment Policy Statement, documentation of decisions including meeting minutes, periodic performance and benchmark reports, manager search documentation, and other written and back-up documents.
Monitor and Select Investment Options
Even though participants may choose their investments, fiduciary duties still include being responsible for the options from which the participants make elections. Selecting investment options—and then continuously monitoring performance, including replacing an investment manager with a more appropriate choice—are among the most important fiduciary responsibilities.
Review and Benchmark Plan Expenses
Another important part of an investment fiduciary's responsibilities is to understand total fees, including those buried within investment products.
Partner With a Retirement Plan Advisor
The world of retirement plans continues to evolve, making it increasingly difficult for plan fiduciaries to get a good night’s sleep. Given the heightened sensitivity to a plan fiduciary’s responsibilities, it’s never been more important to partner with a retirement plan investment advisor.
Our experts will help you address your fiduciary responsibility and develop a comprehensive, customized investment plan that fits your organization’s unique challenges and adheres to the fiduciary duties and procedures mandated by the Department of Labor and ERISA. Our fiduciary services include our assistance in creating an investment policy statement and we will serve as a fiduciary of the plan.
