Selecting a Retirement Plan Advisor
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 consultant (advisor) to assist them in adhering to ERISA’s rigorous standards, and to assist them in meeting their objective of offering a best practice 401(k) plan to their employees. A quality retirement plan advisor will display the following atributes:
Independent advisors have the ability to help evaluate funds and providers objectively and without bias.
Familiarity with ERISA
An advisor who is familiar with ERISA has the ability to keep the committee updated on litigation, legislation and regulations impacting plans and fiduciaries.
ERISA section 404(a) requires fiduciaries to act with the skill, knowledge and expertise of a prudent expert.
Full and Open Disclosure
All plan advisors should fully and openly disclose all sources of fees being received on a direct and/or indirect basis.
Acceptance as Role of Co-Fiduciary
A quality advisor should have the willingness to acknowledge in writing that they are a co-fiduciary to your plan with respect to the investment advice being delivered. Common co-fiduciary advisory relationships include both 3(21) co-fiduciary investment advisors and the 3(38) Designated investment Manager (DIM).