Hello? Fiduciaries? Do you know who you are??
Posted by Andrea Vassiliadis on Tue, Feb 02, 2010 @ 10:15 AM
I always say I can clear a room faster than any presenter when I meet with a prospective client, especially when they have included many "decision makers" from their company in the meeting. I simply say "by the way, by sitting in this room, each and every one of you are a Fiduciary of this plan". But it's true, and it's important that everyone in attendance knows this. There is a lot of talk about "participant education", but the education needs to start first with the Fiduciaries.
For example, at Acme Company, we have Susan the President, Harold the CFO and John from HR attending the meeting. The owner of Acme, Carol, is the only Trustee of the Plan and she is not in attendance. Susan, Harold and John all have very different concerns going into the meeting, and may not have a full understanding of all the concerns they should even have. Furthermore, they all think only Carol has any liability since she is the "Trustee".
Susan will be looking at the balance between cost and service and quality. Harold will be interested in the bottom line expense of operating the plan. John will be worried about ease of operations (i.e., is the payroll linked to the mutual fund platform, or is he looking at a manual process?). But are any of them looking at the Plan as a whole, from outside their specific arena? Do they understand they actually are liable for trying to make the best, most prudent decisions they can about how to choose the best mix of provider and advisor, to help maintain and service their Plan?
Susan, Harold and John have all unwittingly become Plan Fiduciaries, because they are involved in the decision making process. This means that they are responsible for how well the plan operates, and to ensure that the company they hire to oversee the Plan actually delivers on their promises. Lawsuits won by disgruntled plan participants are ending the days of passivity for Plan Fiduciaries.
I make it clear who's who and what's what. Guaranteed Carol will be at the next meeting, and boy can I clear a room!