Skip to main content

You are here


Don’t Ignore Often-Overlooked Fiduciary Duties

Fiduciary Rules and Practices

It goes without saying that fiduciary duties that must be fulfilled. But there are some that are often overlooked, an industry expert warns. 

“When a job becomes too familiar it’s easy to start taking things for granted,” writes Christopher Carosa in Fiduciary News. He adds that the belief that a plan can run itself if “the right pieces” are in place “a dangerous misperception.” Advisors may find Carosa’s identification of overlooked duties useful in serving their clients. 

Reviewing Plan Design. Carosa writes that Nancy Cox, Partner and employee benefit plans expert for The Bonadio Group, remarked to him that many plan sponsors overlook the importance of plan design; similarly, Diana Torzewski, Product Manager at Human Interest told him that it is common for plan sponsors to overlook the opportunity to use plan design features that improve participation ease administration. 

Reviewing Investments. Review and oversight of investment options also is frequently overlooked, Tolen Teigen, Chief Investment Officer of FinDec, told Carosa. Teigen advocates having a process in place to monitoring investment options within the plan, as well as establishing and documenting a prudent process. Arvind Ven, CEO of Capital V Group, argues that testing of the plan and comparison of funds, choices and expenses should be conducted annually. 

Preventing Conflicts of Interest. Use of participant data for cross-selling is a fiduciary issue that Eric Kristenson, Retirement Plan Consultant at Canby Financial Advisors, told Carosa “gets little or no attention.” He suggests requesting in writing what can be done with participant data. 

Delegation. It can be dangerous to assume that fiduciary liability can be fully delegated, Carosa warns. He reports that Cox warned him that even choosing an outside service provider to act as a fiduciary “doesn’t completely absolve” a plan sponsor of responsibility to monitor service providers. 

Paying Attention to Regulatory Filings. Syed Nishat, Partner at Wall Street Alliance Group remarked that plan administration can be complicated and it is easy to miss a step. One administrative requirement Nishat identified as especially important, and for which failure is particularly ill-advised, is filing the Form 5500. He suggested to Carosa that   it could be helpful to set an annual reminder in order to schedule the filing and make sure it is made on time. 

Putting Employees First. Dr. Guy Baker, CFP, founder of Wealth Teams Alliance, argues that many plan sponsors fail to grasp how important 401(k)s are to employees, says Carosa. A manifestation of that is the observation Michael Foguth, founder of Foguth Financial Group, made to Carosa that plan sponsors generally fail to educate plan participants on options available to them and communicate with them poorly. Baker went on to argue that auto-enrollment and auto increases are ways to serve employees well.