401(k) Fiduciary Protection Services

Your Retirement… Our Responsibility
Fiduciary Consultants … Fiduciary Protection Services for You and Enhanced Performance for your Participants
Under the Employee Retirement Income Security Act (ERISA), a “fiduciary” is any person or group of people who:

  • Has the power to excercise discretionary authority or control with respect to the management of a plan subject to ERISA; including the management and / or disposition of asserts
  • Renders or has authority or responsibility to render investment advice for a fee either directly or indirectly
  • Has discretionary authority or responsibility in the administration of the plan.

It is important to note that delegating fiduciary duties to a third party is, in itself, a fiduciary function. A fiduciary is required to undertake due diligence by fully vetting and periodically monitoring selected service providers.


The four (4) standards of care and responsibilities required of a fiduciary by ERISA are very well defined…

  1. A Duty of Loyalty: All decisions must be consistent witht he goal of “acting for the exclusive purpose of providing retirement benefits.” Fiduciaries “owe a duty of loyalty” to the participants … not the company.
  2. A Duty of Prudence: Fiduciaries must use “the care, skill, prudence, and diligence under the circumstances that a prudent person familiar with such matters would use.”
  3. A Duty to Diversify Investments: Fiduciaries must consider; the purpose of the plan; the size and type of investments in the plan; the economic and market conditions; and all other mitigating circumstances potentially effecting the same.
  4. A Duty to Follow the Plan Documents: to the extent they comply with ERISA.

Fiduciaries do not need to have expertise personally. Fiduciaries are held to the standard of what is considered to be “a knowledgeable investor and retirement plan administrator.” However, if a fiduciary lacks the knowledge to manage their 401(k) prudently, a fiduciary may seek advice. In fact, the law requires that they get help. Many plan fiduciaries choose to hire an unbiased independent fiduciary consultant when they:

  • Lack subject matter knowledge
  • Do not have the requisite time to manage their plan adequately
  • Wish to mitigate their fiduciary responsibility

A fiduciary consultant can protect the plan sponsor and other fiduciaries as well as provide value to the participants in reaching their retirement goals, assuming they have the legal capacity to be named a fiduciary and the relevant subject matter credentials and qualifications.


401(k) Benchmarking and 408(b)(2) Fee Disclosure Reporting

Measuring your Service Providers …
Fiduciary Focused …

The Problem …

Effective immediately, new Department of Labor (DoL) regulations ERISA 408(b)(2) require plan sponsors to make quarterly “apple-to-apple” comparisons of their plan fees and expenses to that of industry averages – then reporting these results to their plan participants.

The Solution …

Plan Sponsor Benchmarking Services

The selection of a 401(k) service provider is a critical decision for every plan sponsor. Plan sponsors need to maintain the best interests of their participants in making these decisions; while being attentive to their own set of priorities at the same time.

Plan benchmarking provides sponsors with a great way to make sure their plan measures-up relative to its peers; while meeting their fiduciary duties.

Department of Labor warns that a fiduciary “should establish and follow a formal review process at reasonable intervals to decide if it wants to continue using the current service providers or look for replacements.” Regular plan benchmarking can help to meet the “formal review process standard.”

Plan Design Benchmarking
  • Helps plan sponsors understand how their plan compares to other plans of similar size and design
  • Highlights the benefits of plan design
  • Explains and evaluates the specific vendor services currently provided
Plan Fee Benchmarking
  • Shows how competitive the plan is on fees
  • Helps create leverage to negotiate the best deals with service providers
  • Enables the plan sponsor to compare plan costs to other plans in their peer group
408(b)(2) Plan Sponsor Fee Disclosure Reports

Beginning July 1, 2012 plan sponsors are being required to comply with new ERISA regulations designed to focus attention on the levels of expenses and fees charged to retirement plans. The objective of this new regulation (408(b)(2)) is to provide sponsors with greater transparency and convenience when conducting an apples-to-apples comparison of their service providers.

All service provider fees and expenses will now be made explicit, making it easier for sponsors to know exactly what services they are getting from each vendor and how much they’re paying for each service. Leveling the playing field should empower plan sponsors with the transparency needed to know the true costs associated with their plan and the appropriate level of fees and expenses required to manage it.


The impartial transparency afforded by benchmarking your 401(k) plan is the absolute best way for a plan sponsor to prove they are meeting their fiduciary duty to act in the best interest of their plan participants.

ERISA 404(c) Safe Harbor Monitoring Services

Fiduciary Protection …
Participant Focused …

The Problem …

Participant retirement savings is taking a back seat to current economic challenges. 10,000 baby-boomers a day are entering retirement age ill-prepared to retire – the result? They’re turning to lawmakers, judges, regulators, and the media in the hopes of gaining recourse from plan sponsors and fiduciaries who can’t justify their fiduciary process, fee transparency, cost reasonableness, savings adequacy rates and investment election choices. The burden of proof falls squarely on plan fiduciaries and their providers to justify compliance with ERISA 404(c) safe harbor requirements.

The Solution …

Plan Sponsor Consulting Services

Picking an outside fiduciary to assist with the management of your plan and your investment process is an important decision. Unfortunately many of the investment professionals who are serving the 401(k) retirement space do not have the legal capacity to act in a fiduciary role or the credentials to demonstrate their knowledge. Some key questions you might consider asking your current investment advisor or broker …

  • Has your current investment advisor acknowledged their fiduciary status in writing?
  • Are conflicts of interest and self-dealing been avoided? if so, how?
  • Does your current advisor have the applicable credentials to support their self-proclaimed expertise?
  • Are “watch list” procedures followed for underperforming investment options?
  • Do you know how your current advisor is compensated and does this compensation vary based upon investment selection?
  • Is your present advisor also acting in the capacity of a Fiduciary Advisor under the Pension Protection Act of 2008?
  • These questions are based on one or more fiduciary practices which have been fully substantiated by legislation, case law, and regulatory opinion letters as identified in Prudent Investment Practices for Investment Advisors published by FI360.
404(c) Participant Safe Harbor Monitoring and Compliance

Certainly you expect high-level service and impeccable quality from your recordkeeping service providers. However, understanding their fees, determining fee reasonableness and addressing conflicts of interest are just as critical. Periodic analysis of your service providers should be handled in an unbiased manner to address the following fiduciary concerns:

  • Identification and benchmarking the reasonableness of compensation received by your record keeper either directly (billed to the sponsor or participants) or indirectly from mutual fund companies in “soft dollars” or through revenue sharing.
  • If the provider limits what funds you can choose based on the compensation they receive from the funds, this impacts your ability to offer quality mutual funds in each asset class.


Hiring an outside fiduciary with the demonstrated skills and experience to help shoulder the liability of running your 401(k) just makes sense. We ensure that your plan remains 404(c) compliant allowing you to focus on the things that really matter most -like running your company!

ERISA 404(a)-5 Participant Education and Training

New Disclosure Requirements … Participant Focus …

The Problem …

Effective immediately, new Department of Labor (DoL) regulations ERISA 404(a)-5 require plan sponsors to disclose (at least quarterly) the dollar amount of the expenses and fees that were actually charged during the preceding quarter to the participants’ account for such items as; participant loans, investment advice, brokerage costs, commissions, front or back-end sales loads, redemption fees, transfer fees, insurance wrap fees, and rider charges.

The Solution …

Plan Participant Education Services

Most people when evaluating the services provided by a bank, credit card company, cell phone contract, or internet service provider typically scrutinize the different kinds of fees these companies charge; often making a final decision based on these expenses.

Yet when it comes to 401(k) plans, most people aren’t even aware that they’re paying to participate – let alone how much they’re paying. In deed, according to a recent industry survey of plan participants, 62% said they didn’t know what their fees were and 71% thought they paid no fees at all.

In reality, all 401(k) investors “pay to participate” in their plan one way or another. What varies from plan to plan is exactly what kinds of fees and expenses you pay and how they’re assessed against your account. What’s most important, however, is that a participant recognize and understand how these fees and expenses add-up to reduce the amount they end-up saving for retirement.

Two Categories of 401(k) Expenses

  • Plan-Level Expenses – used to pay outside service providers to cover the cost of administering and advising the plan.
  • Investment fees and Shareholder Expenses – charged by the investment options in the plan.

While participants always pay investment fees, they don’t always pay for plan-level fees. It’s important that a participant understand which fees and expenses they can reduce – and which are non-negotiable.

404(a)-5 Participant Fee Disclosure Reports

Beginning August 30, 2012 plan sponsors will be required to comply with new ERISA regulations designed to make available to plan participants a detailed report of the expenses and fees they pay in their company’s retirement plan. For the first time an estimated 72 million 401(k) participants will know the explicit dollar amount of expenses and fees they pay each quarter for the investments in their company’s retirement program.

All investment fees and expenses will now be made explicit, making it easier for participants to know in dollars and cents what it’s costing them to invest for their retirement. Knowing the true costs associated with their retirement will empower participants the transparency needed to compare and contrast their retirement expenses to that of their other expenses – such as their car note, mortgage, or credit card. Doing so should aid them to better manage their retirement savings.


For most plan participants, transparency in the expenses and fees that they pay in their retirement plan is likely to come as a big shock – sending them to the plan administrator’s office – screaming and shouting – statement in hand. The best way for a plan sponsor to address participant’s concerns and prove they’re meeting their fiduciary duty to act in the participant’s best interest – is to benchmark the plan and share the impartial results with them.

“The selection of a service provider impacts everyone involved in the 401(k) plan. Reasonable fees and access to quality investment choices are the biggest factors in determining retirement success. Poor investment performance and / or high fees wreck havoc on a participant’s ability to save and accumulate enough to retire on their terms.

Lawain MacNiel, President, The Advisor Lab

Copyright © 2014 Wealth Management Partners of MI, LLC