Many plan sponsors do not realize the extent of the fiduciary responsibilities they assume when they sponsor a qualified retirement plan. Many do not take the responsibilities seriously and overlook the 401(k) plan of their company. This will change soon with the new changes to retirment plan and the fiduciary standard. All plans should be reviewed by an independent fiduciary to confirm compliance.

Robert Richter, vice president of SunGard’s wealth management business and also the president of the American Society of Pension Professionals & Actuaries (ASPPA), describes the current situation to FiduciaryNews.comthis way: “It is important to note the regulatory scheme is primarily focused on providers, not plan sponsors. So, the question isn’t whether plan sponsors will pay more attention to their fiduciary responsibilities. Rather, the question may be whether service providers, including investment advisors, are paying more attention to the fiduciary dutiessuch that plan sponsors do not have excessive fiduciary exposure. Ultimately, plan sponsors have fiduciary responsibility, and the regulatory activity has already heightened the awareness of many plan sponsors of this duty.”When this anticipated onslaught of regulations emerges, the world will change for 401k plan sponsors. Kyle J. Pifher, Principal, Findley Davies, Inc. of Columbus, Ohio, says, “The new regulations will require more oversight from the plan sponsor than ever before, and places much of the onus on the plan sponsor for disclosure, due diligence, and frequent monitoring of providers for quality services for the fees paid.”

The onus may be more acute for plan sponsors of smaller plans. Kevin Watt, Senior Vice President, Security Benefit Corp. of Topeka, Kansas, points out, “The impact will be most keenly felt and the risks greatest for small and micro plans where plan sponsors may not have the time and knowledge to address their fiduciary responsibilities.” Christopher T. Thomas, a Financial Advisor with Signature Financial Partners, LLC based in Washington DC, adds, “The bottom line is being a fiduciary takes time.” He sees this as “being a huge burden on smaller companies that don’t have full blown HR departments to handle the increased workload and who might not be willing to pay a professional fiduciary.”

Small to mid sized companies will need to pay more attention to who is advising them on their company plan. Outsourcing the fiduciary responsibilities to professionals may be the prudent choice for most companies.

Please comment or call to discuss how this affects you and your organization.