Question: Our company is growing rapidly and so is our retirement plan. We are interested in hiring a plan advisor. When it comes to providing fiduciary support, what can we expect?
Answer: From a plan sponsor perspective, the act of hiring a fiduciary advisor is a fiduciary act, and one the sponsor should conduct thoughtfully. While fiduciary services vary by advisor firm, here are the types that plans commonly use: An advisor acting as a 3(21) fiduciary provides investment guidance and recommendations to the plan sponsor, but the sponsor makes the ultimate decision as to whether to change the investment lineup. Because the sponsor has the final say, it also assumes the fiduciary responsibility for that decision (though it can document that the process included guidance from a professional advisor). An advisor who acts as an investment manager 3(38) fiduciary also provides guidance and recommendations but makes the final decision on investments. This typically costs more and reduces the plan sponsor’s involvement. Hiring a 3(38) advisor is a deeper level of fiduciary outsourcing and fiduciary protection; they have the discretionary authority to make, vet and implement investment recommendations.
Administering a retirement plan can be challenging and time-consuming for many businesses. Many companies struggle to keep up with their legal responsibilities as fiduciaries. In fact, some of your clients may not fully understand all the aspects of these responsibilities. As an administrative service provider to your clients’ retirement plans, The Retirement Advantage, Inc. (TRA) is uniquely positioned to assist them. Through our 3(16) Fiduciary Services program, your clients can transfer some of their fiduciary responsibilities to us.
Your clients can also outsource select administrative functions to TRA, relieving them of many of the day-to-day duties associated with sponsoring a plan.