Shaffer Capital helps businesses create and run world-class retirement plans, and we help their employees save and grow their funds for a secure retirement. We provide our services in a true fiduciary framework that frees you to focus more on your business and worry less about your retirement plan.
According to the Department of Labor and the Employee Retirement Income Securities Act (ERISA), there are three defined choices for a financial adviser when it comes to the fiduciary responsibilities for managing your company’s retirement plan:
• 3(38) Fiduciary Investment Manager Discretionary
• 3(21) Fiduciary Investment Adviser Non-Discretionary
• Non-Fiduciary Plan Participant Education and Enrollment Services
In order to service retirement plans, an adviser must disclose to the plan sponsor or trustee whether they will serve as a 3(21) Investment Adviser or a 3(38) Investment Manager. As a result of the fee disclosure and transparency requirements, and a growing number of lawsuits filed against plan sponsors, an increasing number of plan sponsors are insisting that advisers serve in a fiduciary capacity. It is crucial that as a plan sponsor or trustee, you have a clear understanding of the different types of financial advisers who can service your retirement plan so that you protect yourself, as well as your employees.
The shifting of fiduciary responsibility is the key distinction, and core advantage, of using a 3(38) Investment Manager. Under the 3(21) “co-fiduciary” arrangement, many plan sponsors assume that they have outsourced the fiduciary liability to a 3(21) Investment Adviser, but the only thing they have done is share in the decision-making process, and legal exposure if anything goes wrong. In the face of ever-increasing litigation and heightened regulatory scrutiny, many plan sponsors are seeking the extra layer of protection offered under the 3(38) Investment Manager arrangement, especially if they are not comfortable making the plan’s investment decisions themselves. Many brokers, consultants, and advisers are creating confusion in the market by positioning themselves as plan fiduciaries when they are not actually alleviating any fiduciary liability for the plan sponsors. If your retirement plan adviser does not assume a full investment fiduciary role, the responsibility and liability still fall on the plan sponsor for the plan’s investment decisions. This is true even when working with an investment “co-fiduciary.” Shaffer Capital can be hired in both capacities through our Registered Investment Adviser (RIA) structure, so the arrangement chosen is dependent upon the relationship you desire.