ERISA Fiduciaries are persons who have the legal responsibility for managing the investments in an ERISA plan, most commonly 1 401(k), 403(b), or 457 plan.
These investment fiduciaries are challenged by the need to foster a culture of fiduciary responsibility that is defined by reliable, fixed standards. The management of investment decisions is not an easy task, even for trained investment professionals; and a nearly impossible task for lay decision-makers who serve as trustees and investment committee members of retirement plans.
Since professional and lay decision-makers depend on an assortment of industry vendors for assistance in managing their diverse roles and responsibilities, it is important to foster and promote a culture of fiduciary responsibility with all involved parties.
While Navion Financial Advisors does not practice law, fiduciaries are governed by one or more of the following:
ERISA—Employee Retirement Income Security Act (impacts qualified retirement plans)
UPIA—Uniform Prudent Investor Act (impacts private trusts)
UPMIFA—Uniform Prudent Management of Institutional Funds Act (impacts foundations, endowments, and government-sponsored charitable institutions)
MPERS—Uniform Management of Public Employee Retirement Systems Act (impacts state, county, and municipal retirement plans)
There are seven practices common to these laws. They are:
1. Know standards, laws, and trust provisions.
2. Diversify assets to specific risk/return profile of client.
3. Prepare investment policy statement.
4. Use “prudent experts” (for example, an Investment Manager) and document due diligence.
5. Control and account for investment expenses.
6. Monitor the activities of “prudent experts.”
7. Avoid conflicts of interest and prohibited transactions.
Investment Stewards, Investment Advisors and Investment Managers who do not foster and promote a culture of fiduciary responsibility are going to lack the sensitivity and awareness to identify the fiduciary breaches of others. When a fiduciary has its own conflicts of interests, then that fiduciary will be marginalized at best; corrupted at worst.
“Society depends upon professionals to provide reliable, fixed standards in situations where the facts are murky or the temptations too strong. Their principal contribution is an ability to bring sound judgment to bear on these situations. They represent the best a particular community is able to muster in response to new challenges.”
Dr. Robert Kennedy, University of St. Thomas
A defined standard is useful to:
Navion Financial Advisors, LLC, offers the following services to sponsors of qualified retirement plans: