How to Talk to Retirement Plan Sponsors About Their Fiduciary Responsibilities

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"The game of life is a lot like football. You have to tackle your problems, block your fears, and score your points when you get the opportunity." When Lewis Grizzard spoke these words of wisdom, he probably wasn’t thinking about fiduciary responsibility—but that's just the problem that needs to be tackled for retirement plan sponsors. Fiduciary liability can loom like a linebacker over businesses that offer a 401(k) plan, and clients need a playbook to help them manage it.

It is no small task to be a fiduciary of a retirement plan, and that duty weighs heavily on plan sponsors. So how can you, as a financial advisor, help them manage that responsibility?


How to help retirement plan sponsors understand their fiduciary responsibilities

Plan Sponsor Fiduciary Playbook
Sponsoring a retirement plan comes with a lot of fiduciary responsibilities. Use this playbook with clients to help them understand what a fiduciary is and how fiduciary responsibilities can impact the plan.
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Have a huddle

The first step is to clear up any confusion plan sponsors have and help them understand what their fiduciary responsibilities are—who are the fiduciaries, what are the necessary fiduciary duties, and what are the risks these fiduciaries face? In addition to understanding that they are required to act solely in the interest of participants in regard to the plan, retirement plan sponsors should also be informed on the key points of being an ERISA fiduciary, such as providing adequately diversified investment options, prudently managing plan investments, and keeping fees reasonable.

You don't want to terrify your clients, but at the same time it’s essential that they understand the serious consequences of not adequately meeting their fiduciary responsibilities.

Call your play

How will your client manage investment selection and monitoring for the plan? A 3(38) investment management service can provide some fiduciary relief by taking on the fiduciary burden of managing the plan’s investment line-up. For many businesses, managing their plan's investments requires a substantial dedication of resources in terms of time and expertise. Clients need someone on their team who can help, and a 3(38) structure can provide the support that allows plan sponsors to focus on their business.

More and more plan sponsors are exploring 3(38) investment management services, so consider signaling the 3(38) play to provide an additional layer of protection from fiduciary risk for both you and your client.

Get on the scoreboard

How does a 3(38) investment management service help you score as a financial advisor? For starters, it allows you to help your clients meet their fiduciary responsibilities and reduce the risk of fiduciary liability they face. It also gives participants the education they need to make well-informed choices that’ll help them save for a secure retirement.

While that may sound more like a perk for your client, you’re also receiving benefits through loyalty, potential recommendations, and ancillary business. Plus, offering a 3(38) investment manager provides cost-effective and time-saving solutions—giving you more time to spend focusing on client services rather than investment selection and monitoring.

In most games of football, there can only be one winner. But when it comes to the game of retirement, everyone can win. Plan sponsors feel at ease with a large part of their fiduciary responsibilities relieved, and financial advisors can show their true value—all while increasing the likelihood that plan participants will reach their retirement goals.

For more information on 3(38) services or other retirement plan options available through Ascensus, contact us today at 800-345-6363.