In a world of changing regulations, shifting market needs and evolving plan designs, defining your fiduciary responsibility as a plan sponsor can be a moving target. The key to keeping your focus in this environment is to establish a consistent process that helps you ensure compliance, reduce risk and maximize outcomes even in the face of changing conditions.
It starts by understanding the obligations of a fiduciary under ERISA, and then implementing a step-by-step plan to meet them. We outline such a plan here, and also introduce the ten most common mistakes fiduciaries encounter, to be more detailed throughout this Series. Being aware of these steps and pitfalls can help you hit the target: becoming a responsible, compliant fiduciary.
A prudent process
The requirements of fiduciary responsibility are rooted in common sense and sound business practice. While specific regulations may change, a prudent fiduciary process should consider several key points.
Today’s changing regulatory landscape includes decisions about how to define a fiduciary. Plan sponsors may be affected by these decisions and may need to alter the way they communicate to participants and beneficiaries as a result. Whether you retain fiduciary responsibility or allocate it to others under ERISA, a clear process and detailed documentation are critical to compliance. Plan fiduciaries need to understand their role, often through periodic education or training, and should be fully engaged in the process. Detailed documentation is also critical. Meeting notes with fiduciaries should be taken in greater detail than traditional corporate minutes, and all minutes and materials distributed to fiduciaries should be retained, approved and signed by each fiduciary. In this environment, rigorous documentation is necessary to protect your interests, as well as the interests of the plan.
Seven steps to success
There are some basic steps you can take to help you meet your investment-related fiduciary responsibilities.
Plan sponsorship has never been easy, and today’s volatile regulatory and market environment adds more complexity. Listed here are some of the mistakes fiduciaries may commonly make. Avoiding them is more important than ever. Public plan administrators should also be aware that ERISA rules provide helpful guidance and best practice, and may actually be binding in certain states.
Stay tuned for more information from TIAA-CREF about how to address these important concerns.
Top Ten Fiduciary Mistakes:
Visit tiaa-cref.org for more in our Fiduciary Responsibility Series and how fiduciaries can address the challenges they face.
TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.