Does creating an Investment Policy Statement (IPS) reduce fiduciary liability or augment it? Though there’s no clear agreement on this matter, the DOL has long maintained it has greater concern for processes than outcomes. Benefits attorneys often view memorializing the process through an IPS and documenting its successful implementation as the surest way to reduce fiduciary liability.
Tag "liability"
The 401k fiduciary typically searches for ways to reduce fiduciary liability. This can be done by hiring what the United States Department of Labor (DOL) terms “prudent experts,” particularly in the area of investments. The DOL permits a fiduciary to appoint, among others, a registered investment adviser to reduce personal fiduciary liability.
Conducting a periodic plan diagnostic test is often seen as an easy way for the typical 401k fiduciary to reduce fiduciary liability. An ERISA plan trustee or fiduciary will usually hire an independent fiduciary consultant to conduct a comprehensive plan fiduciary diagnostic test. Here are five critical areas to consider.
The Supreme Court will raise the visibility of the fee structure within the investments of nearly half of all 401k plan assets. Just because the powers that be say it’s so, doesn’t necessary mean your average fiduciary can rely on the decree. Indeed, the Supreme Court of the United States appears poised rule in favor of mutual fund shareholders, yet, at the same time, mislead both 401k investors and fiduciaries.
A mutual fund’s expense ratio represents only one factor in analyzing the appropriateness of a mutual fund as an investment. Other factors may in fact be more important (including, among other things, portfolio manager tenure, number of holdings, total net assets, investment objective and consistency of returns).
An employee places much trust in an Employee Retirement Income Security Act (ERISA) fiduciary. Because they have the responsibility to act on behalf of retirement plan beneficiaries, plan fiduciaries are held to certain standards of conduct by the United States Department of Labor.
