Although investment performance is how most plan sponsors and participants assess the success of their retirement plan, the Department of Labor has made it clear that in enforcing ERISA they will not judge plan fiduciaries on the results they achieve but rather by the process they follow.
Beltz Ianni & Associates, as a 3(21) investment advisor and co-fiduciary, follows a rigorous process to assist sponsors in fulfilling their duties as a fiduciary in selecting and monitoring the investment options in their qualified plans. Our approach focuses on
- Procedural Process – how the fiduciaries go about the process of selection and oversight
- Asset Allocation – the actual selection of asset classes for the plan and how they relate to each other
- Investment Analytics – how funds or managers are measured over time
The Employee Retirement Income Security Act of 1974 (“ERISA”) says that plan fiduciaries are held to the standard of a “prudent expert” unless they hire a professional “with knowledge of such matters” to assist them (§404(a)). In §404(a)(1)(B), ERISA requires fiduciaries to determine a reasonable asset allocation and ensure that the investment furthers the purpose of the plan.
A Best Practice Approach
Our best practice is the combination of process and analytics giving fiduciaries the knowledge they need to make informed decisions, and what is most likely to withstand challenge by the Department of Labor or plaintiff’s counsel.
- Investment Policy Statement development and review
- Target Date Fund selection and monitoring process
- Documented meeting minutes incorporating decisions and rationale
- Quarterly investment analysis, reporting, and review
- Recommendations for investment selections and changes