Here’s Why You Should Consider Using a 3(38) Investment Manager
The DOL has devoted significant time in recent years to the monitoring and investigating of defined contribution plans. While investigations have been triggered by a number of various scenarios, including Form 5500 violations, disclosure errors and employee complaints, the resulting inquiries have resulted in extensive examinations into how plan fiduciaries have sidestepped their fiduciary oversight and responsibilities.
At the crux of these investigations is the inherent duty and responsibility of a plan fiduciary — which, under ERISA — is one who not only exercises control or authority over the plan management and assets but does so in the best interest of the plan’s participants and their beneficiaries.
It’s imperative that retirement plan administrators understand the full scope of their roles and the related responsibilities of the oversight of their organization’s retirement plan in order to understand the risks involved with the plan and to manage them effectively. And without specific knowledge and understanding of ERISA guidelines and fiduciary expectations as well as investment management savvy and prudence, this can prove to be a formidable challenge for organizational leaders.
Enter: 3(38) Investment Managers.
With growing compliance requirements and stricter oversight, plan administrators can mitigate their fiduciary risk by shifting responsibility for investment decisions to the 3(38) investment manager — a licensed professional with the knowledge and understanding of investment best practices, controls and risk scenarios. This core advantage lessens risk at the hands of the administrator, though the administrator does maintain a fiduciary responsibility to monitor the 3(38) investment manager.
With today’s organizations grappling with increasing regulatory oversight, market instability, and growing litigation surrounding retirement plans, the need for professional guidance is greater than ever. By leveraging a 3(38) investment manager, organizations are able to streamline the operational and administrative obligations associated with running a retirement plan as well as rely on experienced investment professionals to create a thoughtful investment line-up for their plan participants.
For more information on this topic, download our whitepaper, which details 3(38) fiduciary responsibilities and considerations and lays forth details as to why the addition of a 3(38) investment manager can help to mitigate risk and lead to a smooth, efficient investment management process.
Material discussed in this communication is meant to provide general information and should not be acted on without obtaining professional advice tailored to you or your company’s individual and specific needs. Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used by any person or entity, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. This information is for general guidance only and is not a substitute for professional advice.
The information contained herein should not be construed as personalized investment advice. Investment in securities involves the risk of loss, and past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this document will come to pass. Historical performance results for investment indexes and/or categories generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. There can be no assurances that your portfolio will match or outperform any particular benchmark.
Information presented was obtained from sources deemed qualified and reliable; however, MFA makes no representations as to accuracy, completeness, suitability, or validity of any information within this communication and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any forward-looking statements are believed to be reasonable; however, MFA gives no assurance that such expectations will prove to be correct.