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Plan Provider Choice Is an Important Fiduciary Consideration

Plan Provider Choice Is an Important Fiduciary Consideration

January 16, 2018

A retirement plan fiduciary is an important, yet complicated, role that many plan sponsors are increasingly seeking assistance with managing. Plan sponsors may find it helpful to hire an external fiduciary to free time and resources, add valuable expertise, and manage fiduciary risk.

The new Department of Labor (DOL) fiduciary rule is also driving greater use and availability of outside fiduciary services. Most plan providers have made these services part of their offering: 85 percent make 3(21) fiduciary investment advisory services available, and 65 percent make 3(38) fiduciary investment management services available.*

Most retirement plan providers have made 3(21) and 3(38) fiduciary investment services a part of their offering.

Fiduciary Service Options

Fiduciary services offer plan sponsors investment support and protection from liability. Better participant retirement outcomes can be the result of fiduciary services as well – through enhanced plan investment lineups, plan investment performance monitoring and benchmarking, and reduced investment management fees. Even before the DOL proposed a fiduciary requirement, many retirement plan financial advisors already applied a fiduciary standard to their practice.

3(21) Investment Advisory Services

This type of service provides limited scope “assistance” with plan investment selection and monitoring. Financial advisors working in this capacity provide guidance services, but the plan sponsor is responsible for the investment decisions.

3(38) Investment Management Services

This type of service provides full scope “management” of plan investment selection and monitoring. Financial advisors working in this capacity have discretion over plan investment decisions, however, the plan sponsor is ultimately responsible for the prudent selection and oversight of the 3(38) fiduciary.    

Partner with the Right Plan Provider

Choosing the right retirement plan provider can help you simplify fiduciary responsibilities, mitigate risk, and add value. Plan providers often make tools and resources available to financial advisors performing these fiduciary functions for their clients, such as objective reporting tools for use in conducting due diligence and analysis of plan investments.

Look for a provider that offers the flexibility and features that you and your clients need to deliver best interest retirement plan services, including:

  • Investment flexibility, for a variety of ways to help you build plan investment lineups that meet the investing needs of your clients and their employees
  • Investment neutrality, for a wide range of investment choices without requirements
  • Levelized fee structures, a best-interest fiduciary practice, to eliminate conflicts of interest
  • Third-party fiduciary service options, that can simplify fiduciary tasks and mitigate risk
  • Flexible plan design options, to help you create a retirement plan that meets the needs of your clients and their employees

A retirement plan provider is a big consideration when taking a fiduciary position with your clients. Be sure to choose one who is well-positioned to help you deliver best in class retirement solutions to your clients and their employees. 


*Source: Retirement Insights LLC Vendor Profiles Service

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