A Brighter Way
A Brighter Way
When you serve as a fiduciary for an employer's retirement plan, the position comes with responsibility outlined by ERISA, including keeping track of reasonable fees, completing and following an investment policy and providing guidance to participants. Unfortunately, plan fiduciaries that do not fulfill their duties can be found liable by the Department of Labor, and participants have also successfully sued fiduciaries in civil actions.
Here are some of the common mistakes fiduciaries make:
Not keeping track of plan fees. Fiduciaries and plan trustees have an obligation to review fees being charged to the plan annually and compare them with fees charged by similar plans.
Not having an investment policy statement. The investment policy statement outlines how and why funds are added to the investment choices your employees choose from.
Not regularly monitoring investments in accordance with the ISP. The ISP should outline the threshold for fund performance and dictate when funds should be replaced within the plan. Your company's investment committee should meet a minimum of annually to review fund performance.
Not providing adequate guidance to employees. Fiduciaries are responsible for ensuring employees receive proper education to help them make sound decisions about their savings rates and investment choices.
Not using an Accredited Investment Fiduciary. An Accredited Investment Fiduciary has demonstrated that he or she has the knowledge and experience to apply fiduciary best practices.
To learn more about how your fiduciary practices stack up, take this quiz provided by Investment Partners LTD, a Rea affiliate.
This article was originally published in Illuminations: Facts & Figures from people with a brighter way, a Rea & Associates enewsletter, Aug. 3, 2011 issue.
Note: This content is accurate as of the published date above and is subject to change. Please seek professional advice before acting on any matter contained in this article.
