PLANADVISER - July/August 2022 - 40

plan design / Q&A
Larry E. Crocker
On the role of fiduciary management and adviser support
F
iduciary Consulting Group Inc. was
founded early in the millennium as a
resource that plan sponsors, committee
members, plan fiduciaries, trustees and others
could use to better learn about their fiduciary
responsibilities and to help them offload some
of those. Located in Murfreesboro, Tennessee,
the firm offers independent fiduciary management
and oversight and supports plan advisers
looking to ensure the operational compliance
of their clients' retirement plans. Managing
Editor Judy Faust Hartnett chatted with Larry E.
Crocker, the firm's founder, about 3(16) trends.
PLANADVISER: I understand that FCG focuses
on fiduciary and operational compliance
and not on investments. Could you describe
the business model of your practice?
Larry Crocker: Our focus is on the key fiduciary
areas of plan administrative, operational
and regulatory compliance. We've found
these areas generally receive the least attention
by plan sponsors yet can be the source of
the greatest risks to employers. Our goal is to
provide either compliance consulting and oversight
or total outsourced plan management,
depending on each client's specific needs. This
permits the plan sponsor and fiduciaries to
focus on what they do best, while also enabling
the plan adviser to focus on core competencies.
PA: Many
advisers
are
familiar with
investment fiduciary status, as defined in
Sections 3(21) and 3(38) of the Employee
Retirement
Income Security Act.
Lately,
there's been much discussion about ERISA
Section 3(16). What is a 3(16) fiduciary
service provider?
Crocker: Some TPAs [third-party administrators],
recordkeepers, advisers, etc., offer what
are referred to as " 3(16) fiduciary services " or
" administrative fiduciary services " or " fiduciary
fulfillment services. " Some other independent
firms, such as Fiduciary Consulting Group,
provide broader fiduciary outsourcing.
TPAs, recordkeepers and advisers generally
don't serve as the plan administrator, as identified
in ERISA Section 3(16). They also generally
don't serve as the named fiduciary, as identified
in ERISA Section 402(a). However, many service
providers do offer relief to plan fiduciaries for
certain or specific administrative tasks such
as processing plan withdrawals, distributions,
and required notices and disclosures. Plan fiduciaries
and advisers should fully understand
the scope of services when a service provider
agrees to accept a fiduciary role of any level.
A service provider offering to be the plan
administrator and the named fiduciary generally
creates a conflict of interest and unforeseen
residual responsibilities for the plan
sponsor. While some providers obscure the
conflict by setting up a separate entity to
offer their " fiduciary services, " other providers
are more straightforward to clearly state the
limited scope of their responsibility.
PA: As advisers
support
plan sponsors
that may be interested in offloading some
of
these administrative duties, what role
can they play? Is this evaluation different
from that of other plan service providers?
Crocker: As mentioned, it's prudent for sponsors
to consider outsourcing tasks and responsibilities
that fall outside their core competencies.
It's also good for the plan sponsor to
engage a firm that is independent of the plan's
service providers, thus demonstrating a greater
sense of accountability, assuming the sponsor
is looking for a broad outsourced solution.
When reviewing service agreements with
traditional service providers or independent
firms, plan fiduciaries and plan advisers should
focus on the following key items: 1) the ERISA
fiduciary roles being accepted; 2) duties and
responsibilities being accepted; and 3) duties
and responsibilities being retained by the plan
sponsor and plan fiduciaries.
This is easier said than done, due to the
way some agreements are written. If it has a
list of responsibilities the " fiduciary " is willing
to take on, then it's generally accepted that
the sponsor is responsible for everything else.
Many sponsors need help with their internal
controls and processes, but this is generally not
included in outsourced fiduciary firms' duties.
In many cases, the list is short and specific and
targets certain administrative tasks, some of
which have been mentioned. In other cases,
the list can be extensive, which is better for
the sponsor. Understanding what remains the
sponsor's responsibility can be challenging.
A service
provider
offering to
be the plan
administrator
and the
named
fiduciary
generally
creates a
conflict of
interest and
unforeseen
residual
responsibilities
for the plan
sponsor.
40 | planadviser.com July-August 2022
http://www.planadviser.com
PLANADVISER - July/August 2022

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