What is Your Risk? Protecting Yourself as a Fiduciary

The Employee Retirement Income Security Act (ERISA) outlines the minimum standards for how a retirement plan is to be operated. This includes outlining who is considered a plan fiduciary, plan trustee, or plan administrator, and the responsibilities that come with each position.

These roles are not to be taken lightly. Fiduciaries are required to act prudently, follow the terms of plan documents and avoid conflicts of interest. And if they don’t? Fiduciaries who don’t follow these principles of conduct could be held personally liable to restore losses to the plan or to restore any profits made through improper use of plan assets. A daunting responsibility to say the least!

Understanding your role as a fiduciary and acting accordingly will help to keep you between the necessary guardrails and driving smoothly down the road. In addition to our Fiduciary Best Practices Checklist, here are some things to consider as you serve as a fiduciary for your plan:

Are you operating as a fiduciary to the plan? And how to know if you are unsure?

  • What exactly is a fiduciary and how do I know if I am, these are common questions plan sponsors ask. In fact, a JP Morgan survey found that 43% of company fiduciaries didn’t think they even were one! Meaning they subsequently didn’t even know what risks they were taking on or the steps they should be taking it mitigate that risk. In short, under ERISA you are a fiduciary if you have control of the management of the plan or the plan’s assets. Examples of this can include: selecting a recordkeeper (e.g. Fidelity, Empower), hiring an advisor, selecting investments, etc.

 If you are a fiduciary, what risks do you have and what can you do to mitigate them?

  • As plan sponsor and/or plan fiduciary you have personal liability for all decisions related to the plan and one of the ways that companies mitigate this liability is by hiring a co-fiduciary with expertise in advising on retirement plans. By having an advisor who will sign on as a co-fiduciary to the plan you partner with an expert who sits at the same side of the table as you (interests are aligned) and can help provide expert guidance to help you mitigate risk, drive down fees, and help your participants. A 3(21) co-fiduciary sits with you at the table and takes on joint liability with you, while a 3(38) actually takes the entire investment selection risk off of the table for you by taking it on themselves.

 Are you able to provide advice to participants?

  • Your people are your greatest asset as a business owner and in today’s tight labor market it’s imperative to find ways to attract and retain talent. Offering employees access to a credentialed advisor who can legally give advice about the retirement plan, in addition to other financial topics, such as budgeting, debt management, college savings, etc. are all valuable resources to help you attract and retain employees.

Are you able to get quotes from other recordkeepers beyond the broker you are currently using?

  • Many brokers are beholden to only one or a few different recordkeepers, which limits the options that you get to pick from. In the eyes of the U.S. Department of Labor (DOL), plan sponsors need to find service providers that are of high quality, charge fair and reasonable fees and can add value. If your broker is limited in which recordkeepers they can use, it can create challenges for plan sponsors by having a limited selection.

Are you able to access investments beyond just one fund company? 

  • Similar to the above, many brokers are beholden to only one fund company (e.g. American Funds). No different than the car industry, most auto companies don’t make the best car, truck, SUV, mini-van and sports car because it’s hard to be great at everything. Similarly, in the mutual fund world, most fund companies are not great at managing U.S. stocks, international stocks, fixed income, real estate, etc. In the eyes of the DOL, not having access to the entire investment universe is less than ideal for plan sponsors as it limits their ability to get access to high-quality investment options.

BerganKDV has a team of advisors to help plan sponsors understand the complex world of retirement plans by helping with 401(k) design, fiduciary governance, benchmarking 401(k) fees, educating participants, and providing investment due diligence. Want to learn more about what we can do for you? Start here.



Another area for retirement plan fiduciaries is fees. If you’re not sure how your plan’s fees stack up, we can help by providing a complimentary fee benchmark. After reviewing your fee disclosure, we’ll provide you with actionable data so you feel confident in ensuring your retirement plan is in compliance.

Retirement Plan Fee Benchmark


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Diversification and asset allocation do not ensure a profit or guarantee against loss.

The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

The views expressed are those of BerganKDV Wealth Management. They are subject to change at any time. These views do not necessarily reflect the opinions of any other firm. Investment advisory services and fee-based planning offered through BerganKDV Wealth Management, an SEC Registered Investment Advisor.



CATEGORIES: 401k & Retirement | Human Capital Management
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Fiduciaries Can Receive a Free Fee Benchmark

If you're not sure how your plan's fees stack up, we can help with a complimentary fee benchmark.

WEBINAR: How is the SECURE Act Affecting Your Company?

Many of the provisions in the SECURE Act will require changes to how retirement plans are administered and how records are kept.