Fiduciary Responsibilities

If you are in management, you may be a Fiduciary which makes deciding on the right 401(k) advisor critical to protecting your business.

Retirement plans are replacing Social Security as the most important income stream for American’s retirement which means retirement plans will continue to be regulated to protect employees.

You have an obligation to ensure your advisor is performing at least the minimum required. Listed below:

Minimum Requirements:
The Department of Labor (DOL) has warned in its publication, “Meeting Your Fiduciary Responsibilities”; that failure to meet these expectations could result in personal liability for the fiduciary to restore any losses incurred by the plan.  ERISA mandates that plan fiduciaries (the employer) fulfill their duties in the best interests of the plan’s beneficiaries and participants. A friend, a relative or an advisor who does not provide minimum services is not meeting your Fiduciary Responsibility.

Your 401(k)/403(b) advisor is:

  1. Documenting fees paid to the recordkeeper, administrator and the advisor.
  2. Requesting fee reductions for all parties annually and documenting those fee reductions.
  3. Benchmarking fees annually against similar employer plans.
  4. Using a third independent party to perform fund analysis.
  5. Performing fund reviews both quantitative and qualitative quarterly and most importantly documenting the reviews. These reviews are held for seven years by the employer.
  6. Creating an Investment Policy Statement and reviewing the statement annually.
  7. Ensuring you, the employer, maintains all appropriate documents.
  8. Holding Fiduciary Training sessions for management annually.
  9. Employing the same level of prudence, care, diligence, and skill that a knowledgeable person with similar expertise would utilize in the management of an enterprise with comparable aims and characteristics.
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