I am not much of a gambler, but I used to watch poker on TV during its recent boom. Only then, did I understand that a straight couldn\u2019t beat a flush or a full house.<\/p>\n
When it comes to retirement plans these days, plan sponsors may know a straight from a flush, but they are confused between a 3(16) administrator, a limited scope 3(21) fiduciary, a full scope 3(21) fiduciary, and a 3(38) fiduciary.<\/p>\n
While the proliferation of these fiduciary services is welcome to an industry where many plan sponsors aren\u2019t doing a good job of handling their fiduciary responsibility, the problem is that the numbers are confusing the people that it\u2019s supposed to help, the plan sponsors.<\/p>\n
The problem is that the 3(38) investment manager does offer the plan sponsors the most protection in the fiduciary process, but the confusing jargon may make the plan sponsor think a 3(21) fiduciary offers the same protection, which it doesn\u2019t. In addition, people are being tricky with labels, where now I hear that some people are trying to advertise a limited scope 3(38) fiduciary, which really doesn\u2019t exist because the 3(38) fiduciary has nothing that limits its scope in handling the fiduciary process.<\/p>\n
So anyone in the field of ERISA fiduciaries need to explain the difference between the different levels of ERISA fiduciaries so a plan sponsor understand what type of fiduciary service they are buying. Well, that will be next week\u2019s article.<\/p>\n
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