Do you want to be personally responsible legally for the selection, monitoring and replacement of the plan’s investment options? If you don’t use fiduciary outsourcing, it’s all on you. Many fiduciary’s, believe that outsourcing plan functions is the equivalent to fiduciary outsourcing. Often times, it is assumed that the service providers are the ones assuming the fiduciary risk and, unfortunately, this is seldom the case.
Let’s start with who’s guiding your plan. Brokers take on no fiduciary liability under ERISA. You know you have a broker if your employees pay commission. You can also ask if your plan’s adviser is working as a registered representative or an investment advisor representative. Having counsel review your contract is likely best.
| Key Issues | Investment Advisor Representative | Broker |
|---|---|---|
| Fiduciary | Yes, if elected | No |
| Assess gaps to global fiducary standards | Yes | ? |
| Assist with structuring risk management | Yes | ? |
| Document standards of care | Yes | ? |
| Recommend and monitor providers | Yes | ? |
| Monitor expenses | Yes | ? |
| Provide retirement education to employees | Yes | ? |
| Current with plan options and legislative changes | Yes | ? |
We believe you should start with an ERISA 3(21) investment advisor that shares in your liability to be your guide. After clarify your goals, they can educate you and guide you through your options in the fiduciary maze. Did you know you can address risk through fiduciary outsourcing? Consider these options:
A few options include hiring
- An independent Named fiduciary essentially runs your plan. This gives you greatest delegation of risk and time savings.
- A discretionary trustee provides similar fiduciary services but does not oversee the advisor.
- An ERISA 3(16) plan administrator takes on fiduciary responsibility and liability for certain administrative functions the company plan administrator delegates. Those functions may include functions such as transaction process and participant notice distribution services.
- An ERISA 3 (38) investment manager takes on full discretion of your investment menu. Instead, you can hire an investment advisor representative that shares in your investment fiduciary responsibility.. This is called an ERISA 3(21) investment advisor.
My buddy W. Scott Simon, author of the Prudent, wrote “The Different Flavors of ERISA Fiduciaries, Redux (Part 3)” that explains this in greater detail.
Why take on risk where this is no real return?
This retirement plan solution assists and guides plan sponsors through the intricate maze of ERISA fiduciary requirements. This is accomplished with a team of professionals put in place to specifically meet your needs as a plan sponsor. All this is coordinated through your personal consultant who is your primary advisor as an ERISA section 3(21) co-fiduciary assisting you in providing the appropriate solutions for your plan participants and their beneficiaries.
As the Envision 401k Architects advisor to your plan sponsor clients, you are there to help them with the management of their retirement plan. In the new, fiduciary-based system Envision 401k Architects becomes an ERISA section 3(21) co-fiduciary to your plan. Part of this solution involves integrating an ERISA section 3(38) Investment Manager fiduciary that act as your “back office” to help you provide a dynamic servicing solution to your plan sponsor clients.
