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HomeBlogRetirement Plan Success Series – Part 1: So you are a fiduciary!

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As an advisor who focuses exclusively on retirement plans, I speak to a lot of plan sponsors and trustees. On the forefront of everyone’s minds are questions such as “Am I paying too much for my plan?” or “Are my funds outperforming the markets?” or “Do you give advice to my participants?” Although these are all great questions, and ones I will certainly address in my five-part series, the one question I like to ask first is this: “Do you know what your duties are as a fiduciary to a retirement plan?” Exactly! That is the look I typically get when I pose the question.

Very few small business owners, managers or executives seem to take the time to appreciate the single most important concept of running a retirement plan. As a plan sponsor, or steward, you are responsible and have a legal duty to act in the best interest of the person and organization that has entrusted you with the management and control of their retirement assets. Does it include fees, investment choices, provider choices, whether or not participants have access to education, risks and conflicts of interest? You bet. And then some! It is in my opinion that not enough plan sponsors take this seriously, let alone understand the scope of their duties and responsibilities. And although these duties can be shared, they can never be abdicated. Ignorance, or being too busy running a business or organization, is not a viable defense.

Weight Scale, Balance, Mental Illness.

So what to do? The first step is to both recognize and accept that you are a fiduciary; that you have the legal responsibility for overseeing someone else’s retirement plan assets. Whether you are the owner of the business, a trustee, the plan sponsor, a board member, or a member of the investment committee, you are a fiduciary. Second, you must understand and have an awareness of what your duties and responsibilities are. Third, you should perform a self-assessment and do what I call gap-analysis: What should we be doing, what are we doing or not doing, and what are the gaps that carry the most consequence, the most risk, or the most liability? Start there. Make a plan. Take action.

Like strategic planning, these important exercises take time and energy, but ignore or put them off at your peril. Not only do you expose yourself to increased risk of lawsuit or penalties from the Department of Labor, you may cost precious retirement plan assets from the very employees who help build and maintain your business. This happens through misunderstanding fees and who gets paid from them, reluctance to switch providers or your advisor, or disinterest in employee education because it takes time away from productivity, or you think no one is interested.

As a registered investment advisor (RIA), Fragasso Financial Advisors acts as a co-fiduciary to our clients’ retirement plans. (Registration does not imply a certain level of skill or training, nor any regulatory endorsement of approval of our investment advisory services.) We help owners, directors, trustees and committee members understand their role as a fiduciary to their plan. We do not outsource this responsibility. Does your advisor take on this role and this level of responsibility or do they outsource it? Is it in writing?

Please visit the Department of Labor website to learn more about “Meeting Your Fiduciary Responsibilities.” If you would like to discuss how Fragasso Retirement Plan Advisors helps our clients better understand their fiduciary duties and responsibilities, and acts as co-fiduciary to their retirement plan assets, the time is well spent. Call for a consultation. Take action!

Read more blogs from this series!
Retirement Plan Success Series: Part 2: Plan Design Matters… a LOT!
Retirement Plan Success Series: Part 3: Retirement Plan Fees and The Matrix
Retirement Plan Success Series: Part 4: Investment Decisions and Canaries