3(21) Investment Fiduciary: is an Investment Advisor who provides investment recommendations to the plan sponsor/trustee. The plan sponsor/trustee retains ultimate decision-making authority for the investments and may accept or reject the recommendations. Both share the fiduciary responsibility.
3(38) Investment Manager: is special type of fiduciary appointed to have full discretionary authority and control to make the actual investment decisions. The manager may select, monitor, remove and replace the investment options offered under the plan. Only certain types of financial institutions may be appointed as a 3(38) investment manager. The 3(38) must be a registered investment adviser, bank or insurance company and must acknowledge its fiduciary status in writing. The Plan Sponsor and all other plan fiduciaries are relieved of all fiduciary responsibility for the investment decisions made by the investment manager. The plan sponsor does have a continuing responsibility to monitor whether the investment manager is actually performing the services but need not second guess its investment decisions.
Faced with financial market volatility, rising interest rates, regulatory scrutiny, and plan-related litigation activity on the rise, many Plan Sponsors are looking towards professionals to manage their plans.
Engaging a professional to provide investment advice has been common for some time among plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). A more recent trend for defined contribution plan sponsors is to engage advisors to manage the investments for them. An ERISA § 3(38) arrangement represents the highest level of investment liability transfer possible under ERISA, but that doesn’t mean a plan sponsor has eliminated all investment-related fiduciary duties. While engaging a 3(38) lessens your investment-related responsibilities and risk, it doesn’t absolve Plan Trustees completely of all investment fiduciary responsibilities. The process of selecting and engaging a 3(38) itself is a fiduciary responsibility.
We have the capacility to serve our clients as either 3(21) Advisors or 3(38) Mangers. Contact one of our 3(21) or 3(38) investment advisors today to discuss which options is most appropriate for your Plan: 877-595-0833 or use our form below.
Latest Updates & Information
Recent allocation changes have yielded good results in 2017. A greater exposure to International Equities turned out to be timely. There is still room for normalizing this allocation if you have not done so yet.Read full story here
Check out the Fourth Quarter Market Insights led by Beth Spurry, CFP, CTFA.Watch video here
Third quarter, 2017 saw stocks rise amid a brighter outlook for the global economy and better-than-expected corporate earnings.Read full story here