3(16) Fiduciary Services and Why You Should Care
As a financial advisor, you know that the people who exercise control and authority over the management of a retirement plan’s assets are fiduciaries. So are professionals who provide investment advice with respect to those assets. In most cases, plan sponsors understand that they, too, play an investment fiduciary role unless they partially or fully outsource that function to an investment professional.
What many of them don’t appear to recognize is that they also wear another important fiduciary hat based on their control and authority over the administration of the plan. The named plan administrator is responsible for many things including:
- making sure eligibility is determined correctly,
- making sure that a number of required notices and mailings go out every year,
- making sure that plan-related payroll is properly processed and more.
They are also responsible for overseeing the performance of service providers to the plan. So, not only do many employers not realize that they are a fiduciary to the plan, many don’t have the knowledge or experience to properly perform in this capacity.
That’s why some expert TPAs and other plan consultants offer ERISA 3(16) services. Under this arrangement, an employer can outsource the plan fiduciary role and limit their liability and risk, as well as time and effort in managing their retirement plan.
As a trusted advisor, you can play a critical role in helping clients understand this challenge and introduce the opportunity of a 3(16) fiduciary outsourcing relationship.
Talk to us to learn more about how we can guide clients to a solution they can rely on, that will also free them to focus on creating great outcomes.