Plan sponsors spend a lot of time worrying about the market. Is it too high? Too low? Are we heading into a recession? Should we swap out funds before the next downturn? It\u2019s a natural instinct\u2014but it\u2019s also the wrong place to focus your fear.<\/p>\n
Markets go up and down. That\u2019s not a fiduciary failure. That\u2019s Tuesday.<\/p>\n
What actually gets plan sponsors in trouble isn\u2019t performance\u2014it\u2019s process. Or more accurately, the lack of one.<\/p>\n
No one gets sued because a target date fund had a bad year. They get sued because there was no documented reason it was selected in the first place. No benchmarking. No monitoring. No discussion in committee minutes. Just a lineup that \u201clooked fine\u201d until it didn\u2019t.<\/p>\n
That\u2019s the difference. Fiduciary responsibility isn\u2019t about predicting outcomes. It\u2019s about demonstrating a prudent process.<\/p>\n
Did you review your investment options regularly? Did you benchmark fees against comparable plans? Did you document why you kept\u2014or replaced\u2014a fund? Did your committee actually meet, or just exist on paper?<\/p>\n
If the answer to those questions is fuzzy, that\u2019s your real risk\u2014not whether the S&P 500 drops 15%.<\/p>\n
The irony is that sponsors chase performance like it\u2019s the scoreboard, when regulators and courts are looking at the playbook. They want to see discipline. Consistency. Evidence that decisions were made thoughtfully, not reactively.<\/p>\n
A bad process during a good market is still a bad process. You just don\u2019t notice it until the tide goes out.<\/p>\n
So stop trying to outguess the market. You won\u2019t win that game.<\/p>\n
Instead, build a process you can defend in a conference room, in an audit, or in a courtroom. Because when things go wrong\u2014and eventually they will\u2014it\u2019s not your returns that matter.<\/p>\n
It\u2019s your receipts.<\/p>\n
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