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A Fiduciary for You

January 16, 2018

 

The term “fiduciary” is often used and referred to in conversations regarding retirement plans.  But, what exactly is a fiduciary?  The Department of Labor (DOL) has defined a fiduciary as any person or entity who exercises discretionary control or authority over a retirement plan or its assets.  Further, the DOL has stated that the “primary responsibility of fiduciaries is to run the plan solely in the interests of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.”[1]

 

THE ROLE OF A FIDUCIARY

 

A fiduciary is entrusted to make decisions for the benefit of another and is held to the standard of prudence and trust.  The standard of prudence means to act and make decisions showing care and thought not only for the future; but, also considering the present state of things.  Trust is a confidence in someone, a faith or belief in their ability to act fairly and honestly in their decisions and actions to others.   

 

Boiled down to its essence, a fiduciary is entrusted with the responsibility to make decisions that will benefit the retirement plan’s participants and their beneficiaries both now and into the future.  We have thus far defined a fiduciary’s role from a moral standpoint and it is our experience that most people qualify in meeting these standards.  However, a fiduciary must act and make decisions that require an understanding and expertise in a wide variety of areas and that is where it often gets a bit tricky in fulfilling one’s fiduciary obligations.

 

Employee Retirement Income Security Act

 

The Employee Retirement Income Security Act (ERISA) has legal governance of all retirement plans.  As is often the case, with the passage of time, more and more rules, acts, requirements and laws are passed to help define what and how fiduciaries are to act in fulfilling their duties and responsibilities to their plan constituents.  So, while a fiduciary may believe she is acting prudently and wisely in their capacity, they may be in direct violation of ERISA law. 

 

Again, from the DOL website: “Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan or to restore any profits through improper use of plan assets.  Courts may take whatever action is appropriate against fiduciaries who breach their duties under ERISA.”[2]  Ignorance of rules, regulations or laws is not an accepted defense for violating or breaching a rule or point of ERISA law, no matter how well intentioned. 

 

Conclusion

 

So, how do you act as a fiduciary to a plan and keep up with the books and books of ever changing law and regulation.  Fortunately, ERISA law allows the delegation of authority and responsibility to qualified professionals to serve as fiduciaries with you.  We are a 3(38) Investment Fiduciary and along with our partners provide a means for you to delegate responsibility, authority and liability to us for over 95% of your fiduciary duties – and we put it in written form in our contractual agreements with you.  That sounds like the right way to do things.  Let’s do it right together.  We can be reached at:  charris@cannoncap.com , phone: 801 566-3190 or visit our website: www.cannoncap.com

 

 

 

 

 

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