The Ins and Outs of Fiduciary Responsibilities
Robert J. Rafter, Esq.Educator
The Retirement Learning Center
The Ins and Outs of Fiduciary Responsibilities
Fiduciaries By law, every plan must have at least one fiduciary. That
person must adhere to ERISA’s standards of conduct.
A panel of experts will discuss fiduciary fundamentals such as:
▪ Diversifying the investment fund lineup
▪ Monitoring performance and benchmarking fees
▪ Selecting members for the investment committee
▪ Crafting an investment policy statement
▪ Determining fiduciary responsibilities post retirement
▪ Monitoring advisor non-investment risk
.
Are you a designated fiduciary of your plan?
1. Yes
2. No
THANK YOU TO OUR SPONSOR
What is the biggest concern when it comes to
fiduciary responsibilities?
1. Knowing and understanding the current rules that
impact fiduciaries
2. Mitigating litigation risk
3. Determining the reasonableness of fees
THANK YOU TO OUR SPONSOR
Debra L Roberts, MBA CPADirector of Finance
Maryland Supplemental Retirement Plans(MSRP)
Plan Sponsor State of MD Supplemental Retirement Plans
TOTAL DC ASSETS
$4.23B
NUMBER OF
PARTICIPANTS
69,250
ABOUT PLAN
The most significant aspect of our Plans
is the investment authority we have to
directly negotiate with our investment
managers. This shift has allowed us to
significantly reduce fees and change
fund managers more efficiently.
George EvansCo-President
Convergence, Inc.
Non - Investment Risk Continues in the Market
❑ MADOFF-2008 4 Types of Risk Measured at the Advisor
❑ EVERGREEN-2009
❑ ALLADIN-2012 OPERATIONAL
❑ ABRAAJ-2017 COMPLIANCE
❑ TALIMCO-2019 REGULATORY EVENT
❑ CANNELL 2020 VENDOR
Prior to the actions taken against the 6 ADVISORS above - Convergence rated
the non-investment risk profile of each HIGH
Sophisticated Risk Layer added to ODD DDQ and Site Visits
Non – Investment Risk versus the Market
35%
62%
3%
27%
51%
22%
0%
10%
20%
30%
40%
50%
60%
70%
High Medium Low
Non-Investment Risk Rating vs Market
Plan X Market
Richard J. Phelan, CFP®, CEBS, CPCSenior ERISA Consultant, Strategic
Retirement ConsultingVanguard
Sean T. Hannah, Ph.DWake Forest University
Distinguished Professor and Tylee Wilson Chair, School of Business,
Colonel (Retired) US Army
The future of fiduciary is not fiduciary…
Behavioral Governance is the study of the
interrelationships between leadership,
stewardship, and governance.
It’s based on the groundbreaking research
in Neuro-leadership.
Beyond fiduciary compliance - requires
purpose, passion and competence.
Get involved: The Behavioral Governance
Society (3ethos.com).
GOVERNANCE
Critical Neurological Capacities
Behavioral Governance Framework © 3ethos
Money
Market
Bond/
Stable
Value
Growth
Employer
Stock
Int’l
Brokerage
Account
Cash
Bank
Mutual
Fund
Insurance
Company
Investment
Manager
Sep. Acct.
Stock
Exchange
Trust
Recordkeeper
Plan
Trustee
Participant
Records
Payroll
Provider
Participants
Benefits
Committee
Board of Directors
Comp. Committee
CEO
Treasury HR/Bnfts
Consultants
Communications
Appoints Trustee
Hires
Consultants
Selects
Recordkeeper
Appoints
Investment
Mgrs.
Typical Fiduciary Structure & Delegations
Selects
Investment
Line-up
Participant Deferrals
and Employer Contributions
Cash
Deferral &
Investment
Elections
Plan Sponsor
Plan
Distributions
Manages company stock fund;
liquidity; proxy voting; trades
VRU, Internet
Telephone Reps.
Participant
Statements
Investment AdviceParticipant
Advice
❑ Annual review of fiduciary appointments
❑ Training – fiduciaries/benefits committee
❑ Annual review of written investment policy
❑ Quarterly review of investment performance
❑ Periodic Investment Committee meetings
❑ Documentation of all processes
❑ Fiduciary Audit File
Fiduciary Risk ManagementPrudence is a Matter of Process
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