3(21) Versus 3(38): The Investment Fiduciary Choice
Retirement plan sponsors are fiduciaries under the Employee Retirement Income Security Act (ERISA) and must meet ERISA’s high standards of conduct when making decisions related to managing and administering the plan. Some of the most important fiduciary decisions they make involve the prudent selection, monitoring and diversification of their plan’s investment options. ERISA requires that plan sponsors make investment decisions with the skill of an expert and in the best interest of the plan’s participants. Many plan sponsors have concluded that they lack the extensive investment knowledge needed to meet their fiduciary responsibilities. Obtaining the assistance of an investment expert is often a prudent course of action for a plan sponsor and has become an industry best practice.

Hiring an investment expert is a fiduciary action, and plan sponsors must make prudent decisions not only about whom to hire, but what role they will play. They must also decide how to evaluate these services on an ongoing basis. Many plan sponsors are uncertain of their responsibilities and the risks associated with this process.

Our paper titled “3(21) Versus 3(38): The Investment Fiduciary Choice”  provides information and best practices to help sponsors understand their options and responsibilities when selecting and monitoring fiduciary investment support.