The 4 Distinct Duties of Fiduciary Responsibility

The functions of a fiduciary in today’s climate have never been stricter and encompassing. Breaking it down into defined areas helps us to better understand our responsibilities as retirement plan fiduciaries. The four distinct areas of responsibility are Administration & Reporting, Enrollment & Education, Investments, and Service Providers. Throughout today’s blog we will look at how we can manage these responsibilities efficiently and effectively.

In regards to administration and reporting, as fiduciaries, we are required to follow the guidelines set forth for the plan by the plan documents. In this aspect, following procedures of plan documents and completing required due diligence is often more important than the results attained by fiduciary decisions in other aspects. Plancheckr is our most valuable tool in this process, as it allows us to strictly monitor each document in a retirement plan and refer back to it as it needs updating or if a participant/plan sponsor needs a new copy. Plancheckr’s integrative software moves plan documents with just the click of a button from plan year to plan year, which greatly reduces the time we have to spend organizing or finding documents for an audit. In seconds Plancheckr can group together all the clients’ documents for a plan year and format them into a formal report that can be given to the DOL should an audit ever arise.

It is our duty to educate the participants within a retirement plan and make sure their retirement nest egg is not taking on too much risk. Educating the participants on their investments, retirement income needs, how their contributions to the plan affect their income and so much more is part of the regular day to day. Plancheckr has document areas specifically for participant education and enrollment as well. Personally, I like to keep presentations and attendance records from these educational meetings in that area. On the Plan Sponsor’s side they can upload documents showing who is in the plan, when they enrolled, how much they are contributing, etc. This is beneficial for us in multiple ways, one of the least talked about is how it can help us control costs for the plan; a major area of concern for those who call themselves fiduciaries.

On the subject of investments, the highest level of care is required, both for the interests of the participants and ourselves as fiduciaries. Recent lawsuits against Plan Sponsors have been trickling down into plans under five million dollars in assets. These lawsuits ranging from use of costly share classes or excessive service provider fees are expensive, hard to defend against, and the rulings are often costly. As fiduciaries we have options when it comes to designating the requirements of the plan investments through the Investment Policy Statement, a very important plan document. Plancheckr’s investment section allows us to not only store the IPS, but it allows us to file quarterly reports and fund mapping paperwork that Plan Sponsors can view, sign electronically, and schedule meetings or ask questions. The smooth transition from quarter to quarter and year to year provides a trail of documents that shows how we have gotten from point A to B over the years. It is a very effective tool for limiting liability by keeping us up to date and organized.

Dealing with service providers if often the least desirable task of a fiduciary, but one of the most important nonetheless. The liaison that we provide between Plan Sponsors and the companies that hold their plans is extremely valuable. Often the service provider will have documents that a Plan Sponsor may have been unaware of. Costs assessed by the service provider may seem within reason to a Plan Sponsor who does not have the experience that fiduciaries do, and keeping the costs of maintaining the plan reasonable which limits the liability of the Plan Sponsor and fiduciary in charge of the plan to be hit with one of those expensive lawsuits we talked about earlier. While Plancheckr doesn’t interact with service providers itself, it does allow you to keep track of costs and agreements. This area is often overlooked by Plan Sponsors. With reminders to check on Fidelity Bond coverage, the bench-marking of plan fees, and so many others, Plancheckr has really earned its title of “The Gold Standard in Audit Protection,” with its plethora of checks and balances. Plancheckr is a tool that anyone who calls themselves a ‘fiduciary’ should have.

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