What are Your Fiduciary Responsibilities?
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

What are Your Fiduciary Responsibilities?

on

  • 205 views

Presentation on 1/20/12

Presentation on 1/20/12

Statistics

Views

Total Views
205
Views on SlideShare
204
Embed Views
1

Actions

Likes
0
Downloads
2
Comments
0

1 Embed 1

http://www.linkedin.com 1

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

What are Your Fiduciary Responsibilities? Presentation Transcript

  • 1. WHAT ARE YOUR FIDUCIARYRESPONSIBILITIES?GAIN CONTROL berrydunn.com
  • 2. FIDUCIARY RESPONSIBILITYWhat does it mean to be a fiduciary?• Act solely in the interest of participants• Act prudently• Follow the plan documents• Diversify plan investments• Pay only reasonable plan expensesGAIN CONTROL
  • 3. FIDUCIARY RESPONSIBILITYWho is a fiduciary?• Actions speak louder than words! − Exercises discretionary authority or control − Provides investment advice for a fee − Has discretionary authority or responsibility• Named Fiduciary• Investment Manager• Trustee• Investment advisor• Plan administratorGAIN CONTROL
  • 4. FIDUCIARY RESPONSIBILITYDirected Trustee Discretionary Trustee• Most common type of • Exclusive authority and outside trustee discretion over the management and control of• Has custody of plan assets plan assets• No discretionary authority Acts on instructions from a fiduciary with discretionary authority• Lacks requisite authority over plan or its assetsGAIN CONTROL
  • 5. FIDUCIARY RESPONSIBILITYWhat are my fiduciary duties?• Duty of Loyalty• Prudence (prudent expert standard)• Diversification• Follow the plan documents• Establish proper proceduresGAIN CONTROL
  • 6. FIDUCIARY RESPONSIBILITYWhat are my fiduciary duties?• Select & monitor plan service providers − Are fees reasonable? − How to determine reasonableness? − Hire a consultant − Monitor the industry regarding fee developments − Consult with peer companies − Use a benchmarking service − Conduct a Request for Proposal (RFP) process − Are providers doing what they are hired to do?GAIN CONTROL
  • 7. FIDUCIARY RESPONSIBILITYGeorge v. Kraft Food case (7th circuit 2011)• Class action by participants challenging 401(k) plan recordkeeping fees − Same service provider for 13 years without requesting competitive bids − Consultant hired found fees to be comparable and reasonable Court: evidence of prudence but not a complete defense − Take-away: Follow defensible process to determine reasonableness and document such process and decisionsGAIN CONTROL
  • 8. FIDUCIARY RESPONSIBILITYWhat are my fiduciary duties?• Select & monitor plan investments − This responsibility cannot be eliminated!!! − How to monitor? − Use an outside consultant? − What is an Investment Policy Statement? − Why use it? − How frequent? − What are benchmarks? − When to make changes?GAIN CONTROL
  • 9. FIDUCIARY RESPONSIBILITYExamples of Consequences forResponsibilities Failures• Distribute required notices • Prohibited transaction• File required forms • Personal liability• Deposit EE contributions • Civil/Criminal liability• Amend plan documents• Don’t forget about terminated participants!!GAIN CONTROL
  • 10. FIDUCIARY RESPONSIBILITYHow to protect a fiduciary?• Corporate Indemnification• Fiduciary liability insuranceGAIN CONTROL
  • 11. FIDUCIARY RESPONSIBILITYHow to limit fiduciary responsibility?• Document, document, document!!!• 404(c) Sufficient information to make informed decisions• Qualified Default Investment Alternative (QDIA)• Automatic IRA RolloverGAIN CONTROL