Broker Check

Your Fiduciary Responsibilites

One of your responsibilities as the sponsor of a qualified retirement plan is to ensure that your investments are handled appropriately. The law does not require that you become an expert, but it does require that you obtain the help you need.

When you hire an independent fiduciary (even an ERISA 3(38) investment manager), you retain the responsibility to review their qualifications, including credentials, ability to stand behind the commitments they make, and the methods they will use to make appropriate decisions for your plan. You should create records documenting your review process, and maintain them for future reference and examination.

To accurately evaluate a firm you are considering as an independent fiduciary, make sure you ask the tough questions about their ability to perform and help you manage risk, including these:

  • What are the credentials and experience of key consultants at the firm?
  • Has anyone at the firm been disciplined by regulatory authorities?
  • How much experience do they possess in serving as plan-level investment fiduciaries?
  • Are they certified by CEFEXor another reputable, independent fiduciary organization?
  • What are the levels and limitations of their liability insurance coverage?
  • Does their liability insurance cover them as ERISA 3(38) investment managers?
  • Do they receive compensation from investment managers or recordkeepers for referring business?
  • What analytical tools are used to select and monitor investments?
For a copy of the Department of Labor publication, "Selecting and Monitoring Pension Consultants," click here.