Jamie Ann Hayes, QPFC, C(k)P, AIF(r)

Jamie Ann Hayes, QPFC, C(k)P, AIF(r), Partner and Consultant of FiduciaryFirst, specializes in Employer Retirement Plan Fiduciary Services and Corporate Pension Consulting.

Is Your 3(38) Fiduciary Really Customized?

Plan sponsors who rely on the services of 3(38) investment fiduciaries do so for a variety of reasons. A 3(38) investment fiduciary, as defined under the Employee Retirement Income Security Act (ERISA), has a duty to place plan participants’ interests first and to prudently select and monitor a retirement plan’s investment options. These investment advisors recommend a range of investments based on your plan’s objectives and goals. However, are these options truly customized for your participants? Here are some things you should consider when your advisor is presenting an investment menu to you.

Did your advisor ask for your input? Your advisor should discuss your plan’s needs with you, and find out what types of investments you feel are appropriate for your plan. Your 3(38) investment advisor should work with you to draft an investment policy statement (IPS) that defines the criteria for selecting and monitoring your plan’s investments. The IPS should be reviewed at least annually, and updated based on your plan’s needs. The IPS should include your criteria for selecting and monitoring investments, the timing for investment performance reviews (usually quarterly or monthly), and the procedure for replacing investments that aren’t meeting your plan’s needs.

Is your investment menu sufficiently diversified? This can be tricky – you need a range of investment options that is diverse enough to meet your participants’ needs, but also isn’t so broad that you overwhelm your participants. If your plan includes automatic enrollment for your employees, you must also include investments that fit the requirements of a Qualified Default Investment Alternative (QDIA), such as life-cycle or target-date funds or balanced funds.

Has your advisor disclosed all fees for your investment options? Your advisor must provide you with information about any fees received from your plan’s assets, and allow you to determine if the fees are reasonable. Your plan advisor will often provide a benchmarking analysis to show you how the advisor determined whether or not the fees are reasonable.

At FiduciaryFirst, we create investment plan menus that are structured to the needs of your plan and your participants, providing them with the tools to successfully save for retirement. We rely on the Plan Success MethodSM to establish plan goals and develop a well-defined and consistent process that manages your personal and corporate liability. Allow us the privilege of advising you further about 3(38) investment fiduciaries. For more information about the advisory services we provide, contact us at 866-625-4611 or visit www.fiduciaryfirst.com.

Tracking Number:1-598556

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

The target date is the approximate date when investors plan to start withdrawing their money. The principal value of a target fund is not guaranteed at any time, including at the target date.

Retirement Plan Consulting Program and other advisory services offered through LPL Financial, a registered investment advisor. This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

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