The reality is that many retirement planning decisions already require participants to evaluate concepts they may not fully understand. That reality raises an important question. Should a plan exclude a potentially beneficial option simply because some participants may find it difficult to understand?
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Who will attend meetings? Who will prepare reports? Who will respond to participant questions? Who will provide investment recommendations? Who ultimately bears fiduciary responsibility?
That does not necessarily mean fiduciaries should expect a wave of new regulations. Existing direction may already point fiduciaries toward the safeguards regulators expect them to implement.
An employer should look at what they need to do to attract and maintain talent. Once a need is established, the employer must assess all the different technologies and services a 3(38) can provide.
ERISA does not require fiduciaries to predict market tops. It does, however, require a prudent process for selecting and monitoring investments.
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When too many moving parts are introduced at once, decisions slow down. Employers may delay action while trying to understand their options, or they may default to inaction when the path forward is not clear.
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That is the line committees cannot afford to miss. They cannot interfere, but they also cannot ignore. Those two verbs define the narrow lane that fiduciaries must stay in if they want delegation to work as intended.
Fiduciaries can follow every step of a prudent process and still end up with outcomes they did not anticipate. That’s not how fiduciary risk is supposed to work. Or at least, not how it used to work.
