PLANADVISER - January/February 2019 - 23

cover story
How offering 3(38) fiduciary
services can help advisers declutter
the investment conversation
IT IS BECOMING " table stakes " for a retirement plan adviser to offer not just 3(21) fiduciary
services, but 3(38) fiduciary services as well, says Brian Hanna, senior retirement plan
consultant at Everhart Advisors in Dublin, Ohio.
Sponsors he meets when they are doing a search increasingly want an adviser willing
to take on 3(38)-level discretion as an investment manager, Hanna says. " If you are a 3(21)
fiduciary only, you really do need to look at why you are unable to take on the 3(38) role,
and resolve that, " he says. " I think that if you don't resolve that, you may lose opportunities.
You will have a competitive disadvantage, even in the near term. "
Just 25% of sponsors that were questioned for the 2018 PLANSPONSOR Defined
Contribution (DC) Survey utilize a 3(38) fiduciary adviser, but that is up from 16.6% in
2016, indicating growing interest.
It took years for sponsors to see hiring a 3(21) fiduciary adviser as a best practice, says
Brad Arends, co-founder and CEO of the advisory firm intellicents inc., in Albert Lea, Minnesota.
" There are a lot of plan sponsors who are now looking at a 3(38) as a way to reduce
their own fiduciary responsibility, " he says. " I think it's going to be a growing part of our
practice-I know it is. "
A Way to Free Up Resources
Defined benefit (DB) plan sponsors have long utilized 3(38) advisers to have discretion over
their plans' complex investment decisions, but the idea more and more interests defined
contribution plan sponsors, says Phil Edwards, a principal at Curcio Webb, in Princeton,
New Jersey, and an employee benefits adviser whose specialties include helping sponsors
with searches. " On the DC side, the interest stems from the resource constraints that
employers have in working on their plan, " he says. " Everybody is acting on more and more
demands, with fewer and fewer resources. "
Pension Advisors, in Cleveland, offers 3(38) investment manager services
at both the plan and participant levels and sees this as the wave
of the future. These services appeal
to employers that
realize they lack the internal expertise or the time
to make prudent plan investment decisions,
says David Krasnow, president and
CEO. " People are saying, 'I
don't know how much I
Art by Uijung Kim
planadviser.com January-February 2019 | 21
A
Forward
Focus

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PLANADVISER - January/February 2019

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PLANADVISER - January/February 2019 - Cover1
PLANADVISER - January/February 2019 - Cover2
PLANADVISER - January/February 2019 - 1
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