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Most prudent plan sponsors hire a financial professional to help them adhere to ERISA's rigorous standards and to meet their objective of offering a best practices retirement plan to their employees. But for plan sponsors considering hiring a retirement financial professional, what are the attributes of a good one?
Plan fiduciaries must act as prudent experts under ERISA and are therefore held to a high standard of care with respect to plan-related decisions regarding investments, service providers, plan administration and general ERISA compliance issues. ERISA rules are clear- every decision you make as a fiduciary must be in the best interests of plan participants and their beneficiaries, and certain relationships may result in prohibited transactions.
Attributes of a Good Financial Professional | Why You Should Hire One |
|---|---|
Independence | Ability to help evaluate funds and providers objectively and without conflict of interest |
Familiarity with ERISA | Ability to keep the committee updated on litigation, legislation and regulations impacting plans and fiduciaries |
Prudent Expert | ERISA section 404(a) requires fiduciaries to act with the skill, knowledge and expertise of a prudent expert |
Expertise with Plan Design | Ability to help plans maintain qualified status while continuing to meet the goals and objectives of our organization |
Knowledge of the Provider Marketplace | Ability to ensure that our plan is being administered in the most efficient manner and for a reasonable price, and benchmark on an annual basis |
Qualified Plan Investment Expertise | Ability to evaluate, select and monitor fund performance |
Documentation Skills | Ability to demonstrate procedural prudence in a well-documented manner |
Communication Skills | Ability to educate employees regarding plan highlights and how to create an appropriate investment strategy |
Acceptance of Role as a Co-Fiduciary | Willingness to acknowledge in writing that they’re a co-fiduciary to our plan with respect to the investment advice being delivered |
Full and Open Disclosure | Fully and openly discloses all sources of fees being received on a direct and/or indirect basis |
Participant Outcomes | Provide plan guidance to aid plan design, and participant education to improve participant outcomes |
Participant Advice | Ability to provide customized advice to individual participants |
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