Fiduciary Risk to the C-Suite!

Granite Insight

The last few years have been tumultuous when it comes to the fiduciary responsibility in a retirement plan. There have been a multitude of lawsuits relating to fees, fund selection and operations. It has been daunting for the industry, but even more so for the executives of a company.

The latest industry snafu has come from the plaintiff’s victorious litigation in vacating the Department of Labor’s fiduciary rule. What does that mean? Brokers and Advisors do not have as much responsibility. This puts more onus on the C-suite to make fiduciary decisions.

For the CFOs, CEOs or Presidents, the issue is: What do I do if the C-suite or HR do not have enough knowledge and experience? The answer is: hire a bona fide investment fiduciary. Someone who has done it , not been sued and passes mustard with any ERISA attorney (not a corporate attorney).

The simple action of hiring a investment fiduciary affords the C-suite more protection. There is an exhausting amount of providers, but how does an executive choose one? When you go in for surgery, do you go to the rookie or do you go to the doctor that has done the surgery several times?

What a company wants is to hire an investment fiduciary. When you place an advisor in a fiduciary position, the advisor is legally responsible for the investment selections.

There are two types of co-investment fiduciaries. One is called a non-discretionary 3(21) or a discretionary 3(38). The difference is protection for the C-Suite as the 3(38) carries a higher level of protection for the employer.

Here are a few questions to ask a prospective investment fiduciary:

  • Does your agreement specifically state that you are a fiduciary?

  • Are you a 3(21) or a 3(38)?

  • What is your process on selecting a manager?

  • How do you prove your selection process?

  • Are you willing to put the investment process inside the plan’s Investment Policy Statement (IPS)?

  • How frequently do you communicate or validate the process?

  • Have you ever been sued?

If you have any further questions, please do not to hesitate to call 203-210-7814.




1 Landmark Square  Stamford, CT 06901


(203) 210-7814




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