Managing Your Fiduciary Responsibility

How is your fiduciary process for your retirement plan?

Today I’m going to talk about Step 3 of The Ultimate 401(k) Advantage process, and that is Managing your Fiduciary Responsibility. And I’m going to tell you the 5 things the DOL (the department of labor) says every fiduciary should do.

But first, let me ask you a question.

The real question is, how can you as a company that sponsors a 401k or 403b plan, turn your plan from a liability into an asset that gives you an advantage in the marketplace, and become a 401k superhero to your employees?

That is the question, and these videos will give you the answers. Hey I’m Jonathon Schultheiss and welcome to the Ultimate 401k Advantage videos.

So let’s talk about how to help you manage your fiduciary responsibility in the simplest way possible.

But first I think we need to understand what it means to be a fiduciary.

A fiduciary is someone who is legally obligated to put someone else’s interest before theirs. As a company that has a retirement that is made up of your employees money, you are obligated to put their interest first.

Here are 5 things that come from the department of labor, that they say is important in your managing your fiduciary responsibility.

#1 Act solely in the interest of your plan participants.
If every decision you and your company make about the retirement plan, you can honestly say you are acting in the best interest of your participant, then you’re probably doing the right thing.

#2 Carry out your duties prudently. If you google the word prudently, the definition says, in a way that shows care and thought for the future.
So ask yourself, are you carrying out your duties with care and thought for the future of your employees?

# 3 Follow the plan document. And this is a big one.
Just because something is allowed ERISA, by the rules that govern retirement plans, doesn’t mean that your plan can do it, unless your plan document allows. Always check you plan document.

I find this is the most common issue and I talk about some simple solutions in the book.

#4 Diversify Plan Investments. You want to make sure you have a lineup of plan investments that meet the needs of your participants.

And #5, Pay only reasonable fees and expenses. If the plan expenses are being paid from the plan asset, which belong to your employees, you want to make sure that they are reasonable.

This is where we have seen the largest growth of lawsuits again 401k plans.

In step 4 of the Ultimate 401k Advantage process, I go into great detail on benchmarking your plan’s fees and expense.

The Department of Labor also goes on to say that you can limit your liability by documenting the process that you used to carry out your responsibility.

So, if you can document that you have carried out all 5 of these things we’ve discussed, then there is a good chance that you are meeting your fiduciary responsibility.

If you are working with an advisor, make sure that they are documenting this process to help you protect your company from fiduciary risk.

If you want to learn more about this and about how to gain the Ultimate 401(k) Advantage for your company, then click on the link and get your free copy of the Ultimate 401k Advantage, the 5 Step process to Becoming a 401k Superhero to Your Employees today.