Plan Fiduciaries must act as prudent experts under ERISA, and are therefore held to a high standard of care with respect to plan-related decisions regarding investments, service providers, plan administration, and general ERISA compliance issues.
Most prudent plan sponsors hire a plan advisor to help them adhere to ERISA’s rigorous standards and to meet their objective of offering a best practices retirement plan to their employees. In what capacities is your plan advisor serving? Is he or she helping you meet this objective? ERISA rules are clear – every decision you make as a fiduciary must be in the best interests of plan participants and their beneficiaries, and selecting a good advisor is a major one of these decisions. So, what constitutes a good advisor and what attributes should you be looking for? Make sure you can check the following off of your list:
- Independence – ability to help evaluate funds and providers objectively without conflict of interest
- Familiarity with ERISA – ability to keep the committee updated on litigation, legislation, and regulations impacting plan fiduciaries
- Prudent Expert – ERISA section 404(a) requires fiduciaries to act with the skill, knowledge, and expertise of a prudent expert
- Expertise with Plan Design – ability to help plans maintain qualified status while continuing to meet the goals and objectives of your organization
- Knowledge of the Provider Marketplace – ability to ensure that your plan is being administered in the most efficient manner and for a reasonable price
- Qualified Plan Investment Expertise – ability to evaluate, select, and monitor fund performance
- Documentation Skills – ability to demonstrate a procedural prudence in a well-documented manner
- Communication Skills – ability to educate employees regarding plan highlights and how to create an appropriate investment strategy
- Acceptance of Role as a Co-Fiduciary – willingness to acknowledge, in writing, that they’re a co-fiduciary to your plan with respect to the investment advice being delivered
- Full and open Disclosure – Fully and openly discloses all sources of fees being received on a direct and/or indirect basis
