PLANADVISER - Winter 2023 - 13

them that the risk of losing a
participant lawsuit can be minimized.
" I explain, 'Here's how you
can sleep at night: I'll walk you
through the fiduciary processes
that we follow to help you do all
of this.' It's the unknown that's
scary to people. The known is not
that scary, once you show them a
pathway to solve for these issues. "
Fiduciary Specifics
Asked for the bottom-line message
he wants committees to understand
about investment selection and monitoring duties,
Kaczynski says, more than anything, ERISA is a processdriven
statute. " All of the legal cases are framed around that
issue of process, and the processes need to focus [on] acting
with prudence, in the best interests of participants, " he says.
Kaczynski also explains to committee members that a
plan sponsor needs to either be an investment expert or
hire an outside investment expert. If the committee hires
an adviser as the investment expert, he tells committee
members, that is a fiduciary act in itself. Among other
things, members need to understand before hiring someone
whether that adviser will act as a 3(21) fiduciary investment
adviser, who makes specific investment recommendations
that the committee then decides whether to implement, or
as a 3(38) fiduciary investment manager, who makes and
implements investment decisions.
Recordkeeper selection and monitoring also fall under
fiduciary responsibilities. Lyday explains in training
sessions that committee members should understand what
their specific plan and its participants need, then hire a
recordkeeper accordingly. " We see many plans that have
a 'plan in a box,' which may not be what that participant
group needs. Often, the committee just followed the advice
of its [former] plan adviser, without understanding what
the participant base actually needs. " For instance, a recordkeeper
whose value is closely tied to its online participant
tools may have less value to a base of employees who work
in the field than to one mainly using computers.
During LHD Retirement's training sessions, Ludwig says,
his firm's representatives discuss how, once a recordkeeper
has been chosen, it is important to benchmark that provider's
fees and services on an ongoing basis. " We are looking
at fees annually, and every three to four years we do broader
benchmarking with [a request for proposals] to look at the
services the plan and participants are getting for the fee, "
Ludwig says. " The services that recordkeepers offer change
over time, and so do the employers. You have to [consider]
what services will drive efficiencies and increase overall
" All of the legal cases are framed
around that issue of process, and
the processes need to be focused
[on] acting with prudence, in the
best interests of participants. "
satisfaction with the plan now. "
Ensuring the reasonableness of a plan's investment
and administrative fees also falls under fiduciary duties.
It can be hard for committee members to grasp that ERISA
does not require them to find the lowest fees, Ludwig says;
rather, they need to look for the best value for that plan's
participant base for a reasonable fee. " That is the hardest
part for committees to understand, because we've been
on a 10-year run of 'the lowest cost wins,' " he says. " What
they have to do is look at what [recordkeeper] services are
going to help those participants: In the end, the value of
the services to their plan's participants is more important
than getting a fee that is 2 basis points lower than at
another recordkeeper. "
Ongoing Training
Lyday and his team do not label it overtly as " fiduciary
education, " but at every quarterly meeting, they give each
committee a concise legislative and regulatory update.
Pensionmark also has an extensive online learning system
that provides more information on topics for plan sponsors,
often in the form of a brief, usually five- to seven-minute,
video and a longer article for those who want more in-depth
details. " These sponsors are real people who are also participants
in the plan, and they don't all like to learn in the
same way, just like participants in general, " he says.
At every committee meeting, DBR & Co. representatives
typically brief the committee on one or two recent legislative,
regulatory or legal developments that affect retirement
plans. Additionally, some other topics DBR covers at the
meetings, such as the annual review of a plan's investment
policy statement, offer a chance to revisit the highlights of
how the statement connects to fiduciary duties. " When we
do the IPS review, for example, it gives us the opportunity to
remind the committee why we even have it, " he says. " We
remind them that a plan is not required to have an investment
policy statement, but if you have one, you're required
to follow it. " -Judy Ward
Plan Management | Winter 2023 | planadviser.com 13
http://www.planadviser.com
PLANADVISER - Winter 2023

Table of Contents for the Digital Edition of PLANADVISER - Winter 2023
