INVESTMENT FIDUCIARY SERVICES
Most plan sponsors look to investment professionals to provide fiduciary oversight to select, monitor and replace the investment options in their retirement plan.
SVA Plumb Financial can act as a directed fiduciary defined under ERISA Section 3(21) and a discretionary fiduciary defined in ERISA Section 3(38).
3(38) Discretionary Fiduciary - SVA Plumb Financial acts as a fiduciary under section 3(38) when we are provided full discretion over the plan assets. Under this arrangement, we select and implement the investment options and models on the plan sponsor’s behalf, without their consent. Designating SVA Plumb Financial as a 3(38) fiduciary allows the plan sponsor to better manage and reduce their fiduciary risk.
3(21) Directed Fiduciary - In this role, we recommend the appropriate investment options and investment models to the plan sponsor. However, the plan sponsor ultimately approves or disapproves of our recommendations.
Under both 3(21) and 3(38), SVA Plumb Financial accepts fiduciary responsibility and adheres to the duty to serve solely in the interest of plan participants. In both roles, we have to meet the “prudent man” standard of care under ERISA §404(a). Plan sponsors retain the responsibility to select and monitor the advisor, regardless of their advisor’s fiduciary status.
It is important to know that a plan sponsor cannot completely eliminate its fiduciary liability. The plan sponsor is still responsible for the prudent selection of the 3(38) investment manager and must monitor and benchmark that 3(38) investment manager. If the plan sponsor overrides the decisions of the 3(38) advisor, the plan sponsor assumes the responsibility and liability.