As you likely know, the Department of Labor is sharply focused on how investment professionals like you meet your fiduciary responsibilities relating to qualified retirement plans. Depending on your business and relationship model, you may find it appropriate to delegate some of your responsibilities with respect to the investment lineup on your plans. If you do so in a diligent and prudent way, you can limit your liability and reduce your workload as well.
Here are three reasons to consider hiring a 3(38): First, as long as the Plan's Fiduciaries prudently select and monitor a 3(38) investment advisor, they are not liable for investment losses that are managed by the 3(38). Second, if the plan sponsor lacks expertise on investment principles or processes, their election of a 3(38) investment advisor will reduce risk because they'll be transferring discretionary authority to a qualified party. And third, under ERISA, if an entity has discretion to make a decision, that entity is responsible for that decision, not the entity that appointed it. By engaging a 3(38) fiduciary, the plan sponsor reduces their legal liability because the 3(38) is responsible for making investment decisions, not the plan sponsor.
As our retirement plan partner, you may choose to have ABG Portfolio Strategies sign on to your plans as an expert 3(38) advisor and reduce your investment liabilities and your workload. When you elect to have us perform this fiduciary role, we take responsibility for signing on as a co-fiduciary, drafting the investment policy statement, building the fund menu, monitoring the fund menu, making fund changes as appropriate, determining mapping strategies and providing all required documentation.
We're here to support you and help drive retirement plan success. If you'd like to learn more about our 3(38) investment fiduciary services, just reach out. We'll be happy to chat.