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.

Ongoing Evaluation of a (3)38 Fiduciary

Ongoing Evaluation of a (3)38 Fiduciary

As part of the Employee Retirement Income Security Act of 1974 (ERISA)[1], businesses now follow minimum standards as part of general fiduciary risk management[2]. Under the 38th definition of that act, plan sponsors and associated fiduciaries are absolved of responsibility for the decisions made by the investment manager. However, moderating their risk means evaluating that investment manager and documenting that evaluation on an ongoing basis.

But what does this evaluation require? Here are a few things your business should include as you evaluate your own investment plan manager.

Manager Background

Regardless of regulations, you should take steps to vet your investment plan manager. If you’re entrusting an entire firm with the duty, you should check into the leaders’ credentials and backgrounds. Look for CEFEX certification[3] and make sure they haven’t received disciplinary action by regulatory authorities. Their past experience in delivering advice on investment plans is crucial as well since it will ensure you’re receiving those benefits.

Conflicts of Interest

Even a firm with a solid background can go astray. Take time to guarantee they don’t accept funds from any of the money managers they select; they should be able to disclose this information upon request and even sign a conflict of interest form. Ask about how they prevent conflicts of interests. They should be willing to disclose all forms of compensation they receive, including commissions, bonus payments, and revenue-sharing income. In addition, inquire for information on the percentage of the firm’s income that comes from retirement plan consulting and fiduciary services.


Before you sign with a plan manager, you should ensure they have the required ERISA fidelity bond in place. Ask about their liability insurance and whether the coverage protects their role as an ERISA 3(38) investment manager, then document and store all of that information.

An important part of fiduciary risk management[4] is monitoring the third-party individuals you trust to administer your plans. If you not only conduct a thorough evaluation but also continue to monitor your investment manager, you’ll have the documentation you need to reflect your due diligence in selecting the plan's investment manager. 

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