Monday, March 11, 2013

7 Reasons for Hiring a Dedicated Retirement Plan Advisor

Fiduciaries of employer-sponsored retirement plans hire a Retirement Plan Advisor to meet their responsibilities under the Employee Retirement Income Security Act (ERISA) and to improve the probability that their employees’ retirement investment goals will be achieved. A Plan Advisor that is dedicated to retirement keeps abreast of changes in the industry and in the regulatory environment and interprets all relevant developments for its clients.

The Plan Advisor creates a custom set of processes and prudent practices for its clients, delivered through at least seven major functions, to help achieve their retirement plan benefit goals. This series of articles looks closely at those seven major functions.

1. Meeting Fiduciary Duty

Fiduciaries are expected to apply the standards of a prudent expert in their investment decisions. If the fiduciaries do not possess the required level of investment expertise they may hire a Plan Advisor to meet this standard. Hiring a Plan Advisor does not eliminate potential fiduciary liability, as the fiduciaries must closely monitor the services of the Plan Advisor.

The consequences of imprudent investment decisions and the potential fiduciary liability vary according to the type and purpose of the trust. Fiduciaries of endowments and foundations are subject to state law. Most states have adopted prudent investor legislation, which sets forth the standards and expected practices of fiduciaries. Often, fiduciaries’ main concern and motivation for hiring a Plan Advisor is avoidance of legal
action that can be brought against them as individuals.

Defined benefit pensions, which are subject to ERISA, carry more serious potential consequences for fiduciaries. ERISA sets forth expected practices for fiduciaries in very detailed language. Fiduciaries who are unaware of, or choose to ignore ERISA standards, increase the possibility of having to defend themselves (individually) in a civil lawsuit. Plan Advisors who are hired by defined benefit plans that fall under ERISA serve their clients well by educating them on their fiduciary role and by establishing fully documented procedures to ensure compliance. An example of such documentation is formal meeting minutes for all meetings of the fiduciaries.

View our next blog entry to continue the series. To learn all Seven Reasons for Hiring a Dedicated Retirement Plan Advisor, download our full whitepaper.

If you have any questions about retirement plan services, or would like to begin talking to a dedicated retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at

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