You Don’t Have to Manage Your Plan Alone
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Reduce Your 401(k) Fiduciary Risk
If you make decisions for your company’s retirement plan, you are a fiduciary.
Are you prepared to accept personal liability for your company’s retirement plan?
As someone who makes decisions for your company’s retirement plan, you’re vulnerable to fiduciary risk. This means that administrative, operational, and investment management duties must be carried out diligently and in the best interest of employees, otherwise you’re personally liable. That’s a big responsibility, but you do have options. Many business owners and HR professionals aren’t investment experts. To reduce their risk and ensure the health and safety of their retirement plan, many businesses outsource fiduciary responsibility.
A Trusted Decision Maker
A fiduciary has important decisions to make. Employees in the retirement plan are counting on the fiduciary to protect their savings and provide investments that are managed with their best interest in mind.
Fisher’s Rigorous Lineup
We use a multi-level process to analyze and monitor more than 25,000 funds. The result? The best-of-the-best investments for your retirement plan.
| Visual | Audio |
|---|---|
| Music Plays | Dots and Title appear. “25,000+ initial fund possibilities |
| Funnel Builds from top down, swipe from right, then text appears next to section. “Category Selection” is written on the first section of the funnel. “Select appropriate investment strategies” appears next to the funnel. | |
| The background builds leading to next section of funnel, text appears on the right and continues until funnel is built | |
| Continuous Process Review appears and starts to rotate counter clockwise. The title of each section of the funnel read “Active or passive”, “Fund analysis” and “FIT Review”. Next to each read respectively, “Add value thorugh active or passive management,” “Identify best-in-class funds,” and “Curate a fund lineup to meet client objectives. | |
| Dots animate and fall through the funnel | |
| “Select Funds” Appears at the bottom of the funnel and hangs on balls falling for 5 seconds | |
| FI Logo appears with the following disclosure underneath it: “Investing in securities involves the risk of loss. Intended for use by employers considering or sponsoring retirement plans; not for personal use by plan participants. ©2022 Fisher Investments |
Tracking Your Responsibilities
The amount of fiduciary responsibility you take on is up to you. But if you’re not prepared for time-consuming and potentially confusing plan management tasks, you can work with a retirement plan professional, who can take on the burdens and liabilities of a fiduciary.
Hiring a CEFEX® certified ERISA 3(38) Investment Manager like Fisher reduces your liability for investment decisions and takes work off your plate so you can focus on running your business.
Understanding Your Risk
Fiduciary mismanagement can cost a business tens of thousands of dollars in legal fees and fines. The better you understand your risk, the more you can do to minimize it.
Compare Fiduciary Options
3(21) Investment Advisor
A co-fiduciary who makes investment recommendations. The sponsoring company remains liable for decisions.
3(38) Investment Manager
A fiduciary who takes legal responsibility for investment management decisions. The sponsoring company is not liable for the manager’s decision.
CEFEX Investment Manager
A CEFEX® certified fiduciary (awarded to the top 1% of plan advisors) takes legal responsibility for investment management decisions. The sponsoring company is not liable for the manager’s decisions.
You Don’t Have to Manage Your Plan Alone
Every retirement plan has a plan fiduciary — someone who’s responsible for administrative, operational, and investment management. If these responsibilities aren’t carried out diligently and in the best interest of employees, the fiduciary is personally liable. Download the checklist to learn how to manage your fiduciary risk.
Must-see 2-minute video
Three Types of Fiduciaries
When hiring a plan advisor, you typically have three options: a 3(38) investment manager, a 3(21) plan advisor, or a non-fiduciary advisor. It’s important to understand the differences so you can select the option that best aligns with your retirement plan needs. In this short video you’ll learn the roles of each type of fiduciary advisor and what makes Fisher different from most other advisors.
| Visual | Audio |
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| Upbeat Music | Fiduciary Services Fisher Investments® 401(k) Solutions |
| The volume of the music is reduced. Male Voice: “What is a Plan Fiduciary? A retirement plan fiduciary is a person or company that is legally required to make decisions that are in the best interests of a retirement plan.” | A man dressed in a suit speaks to the camera. A flyout in the lower left corner identifies him as Ian Epstein, National Director of Retirement Plan Consultants |
| When hiring a plan advisor, you typically have three options: 1.) Hire a 3(38) Investment Manager 2.) Hire a 3(21) Plan Advisor; or 3.) Hire a Non-Fiduciary Advisor | A white background flies in from the left appears with green text that reads: When hiring a plan advisor, you typically have three options: 1. Hire a 3(38) Investment Manager 2. Hire a 3(21) Plan Advisor 3. Hire a Non-Fiduciary Investment Advisor The flyout stays on screen for several seconds and then disappears. |
| “A 3(38) Investment Manager takes on the full responsibility of managing the investment lineup and has discretion to make necessary changes. In doing so, the 3(38) Investment Manager takes on the primary fiduciary responsibility for investment decisions and is legally obligated to make decisions in the best interest of their clients.” “A 3(21) Plan Advisor makes investment decisions but leaves the ultimate decision and liability to you the plan sponsor. A 3(21) Plan Adviser shares some of your legal liability by acting as a co-fiduciary.” “A non fiduciary advisor typically works for an insurance or investment company, recommends investments thay they believe are suitable to you as their client, but they are not held to the same standard as a fiduciary.” | A white background appears with a chart with 4 columns that read: Non-Fidudciary Plan Advisor, 3(21) Plan Advisor (Co-Fiduciary), Typical 3(38) investment Manager (Fiduciary) and Fisher 3(38) Investment Manager (Fiduciary Plus) The flyout stays on screen for several seconds and then disappears. |
| “So, why is it important to hire a 3(38) Manager like Fisher?” | A white background flies in from the left appears with green text that reads: Why is it important to hire a 3(38) Investment Manager like Fisher? The flyout stays on screen for several seconds and then disappears. |
| “We constantly monitor fund performance because few funds stay at the top of their category over time. For example, over a single five-year period, only about 15% of domestic equity funds that performed in the top half of their category in 2017 were able to maintain that status annually through 2021.” | The camera goes back to the man as he continues to speak. |
| “Fisher also offers additional services that many 3(38) Investment Managers don’t provide such as:” • Incentive structures that are aligned with your success (no revenue sharing) • We offer help creating and maintaining a fiduciary audit file for you We offer fiduciary education for the plan committee | A white background flies in from the left appears with green text that reads: • Incentive structures that are aligned with your success • Help creating and maintain a fiduciary audit file • Fiduciary education for the plan committee The flyout stays on screen for several seconds and then disappears. |
| “Fisher works for you—not for kickbacks—and puts our focus on growing your wealth. Fisher won’t compromise your earning potential to make a quick buck. We focus on quality over the long term because we understand how big a difference this approach makes for you when it’s time to retire.” | The camera goes back to the man as he continues to speak. |
| The volume of the upbeat music increases. | A white background slides in from the right. Fisher Investment 401(k) Solutions logo fades on to the screen. |
| The music continues to play. | |
| The music fades out. | The screen fades to black. |
Frequently Asked Questions About Fiduciaries
The word “fiduciary” is legalese, but the concept is simple. If you’re a decision maker on your company 401(k) plan, you’re responsible for doing right by your employees. Learn more about the responsibilities that come with being a fiduciary and how to manage them.
If you make decisions for your company’s 401(k), you are a fiduciary. Every retirement plan needs at least one trusted, reliable fiduciary, someone who works in the best interest of the plan and its participants. To better understand your role as a fiduciary, consider these common questions.
As a fiduciary, you’re expected to act prudently and to consider how your decisions will affect employees. It also means you need to have administrative systems in place that document your decisions and communicate important details to employees. If you don’t meet your fiduciary responsibilities, you may be liable for harm caused by your decisions. Fiduciary mismanagement could cost you and your company tens of thousands of dollars in legal fees and fines.
Being a fiduciary means you’re liable if something goes wrong with your plan. When considering your liability, understand:
- Ignorance is no defense in a court of law.
- A fiduciary is personally liable to make good on plan losses due to an ERISA provision breach.
- The Department of Labor may assess a civil penalty equal to 20% of the recovery amount.
- Individuals may be fined up to $100,000 and jailed up to 10 years for ERISA violations.
- Companies may face up to $500,000 in fines for ERISA violations.
There are three types of retirement plan fiduciaries:
- A 3(38) investment manager is a fiduciary who is responsible for plan investment decisions. Your responsibility is to select and oversee your fiduciary.
- A 3(21) investment advisor is a co-fiduciary, which means they make investment recommendations, but the ultimate decision is up to you and you’re still responsible and liable for the decisions made.
- A 3(16) administrative fiduciary is responsible for fulfilling specific administrative duties on behalf of the plan. For example, a 3(16) administrative fiduciary signs and files Form 5500 with the Department of Labor and approves loans. However, you are still responsible and liable for the decisions made.
Yes, you can outsource many fiduciary duties including investment management and administrative tasks. Outsourcing fiduciary duties can reduce both your liability and administrative burden. Some retirement plan providers, third-party administrators, or record keepers offer fiduciary services. If you consider outsourcing with a fiduciary, find out exactly what services they offer and what responsibilities remain with you. Some leave critical duties up to you. Watch out for fiduciaries who:
- Have incentive structures that include revenue sharing or kickbacks.
- Don’t help and maintain a fiduciary audit file.
- Don’t offer fiduciary education for your plan committee.
As a 3(38) investment manager, Fisher maintains the highest fiduciary standards and will partner with you to make sure you, your company, and your employees are protected.
Contact Us
One of our 401(k) business specialists would love to talk to you about your company’s retirement plan needs.
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