Especially given today’s market volatility and legal environment, plan sponsors are generally looking for ways to manage the risks associated with serving as an ERISA fiduciary — and specifically, for ways to help mitigate the risks that arise from selecting and monitoring a plan’s investment lineup. Even where agreements set limits and boundaries, a plan committee’s actions may dictate fiduciary responsibility.
When used properly, a consultant, investment advisor or investment manager can be a valuable ally in risk mitigation. Whether plan sponsors do it themselves or hire a third party, a plan sponsor’s liability can be mitigated but never completely eliminated. Each plan committee must decide which approach best fits their circumstances and risk tolerance.
A primer from Vanguard discusses the different approaches DC plan sponsors can take to avoid or limit potential fiduciary breach claims relating to the investment options they offer in their plans. In addition to guidance on hiring third-party assistance (both fiduciary and non-fiduciary), the 6-pager addresses hiring a 3(21) investment advisor and hiring a 3(38) investment manager, and touches on the risks inherent in offering company stock as a plan investment option.
Written for plan sponsors, the commentary is another tool that can help you establish yourself as a trusted source of guidepost information on this high-stakes issue.
