As the federal government attempts to redefine who is a fiduciary when it comes to investment advice, Fidelity is tackling the problem head on.
Fidelity Investments has launched a new service called Third-Party Fiduciary Services, which helps plan sponsors and advisers who consult on retirement plans with the selection and monitoring of investments while providing increased liability protection for the plan sponsor.
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Plan sponsors can choose from three outside providers: Mesirow Financial, Morningstar Associates and Wilshire Associates.
Our new program enables advisers and smaller clients often family businesses, startups and companies with limited staff to spend more time helping employees take advantage of workplace benefits and less time on administrative details, said Ted Madden, senior vice president of sales for Fidelity Investments. Fiduciary responsibility and liability protection require a high level of expertise. By offering a choice of third-party providers, our adviser- and employer-clients can align with the firm that best meets their specific fiduciary needs.
There are two types of fiduciary support available, ERISA Section 3(21) support, which offers sponsors and advisers investment selection help, continuous monitoring of funds, detailed quarterly reporting and recommendations for removal and replacement of an investment that may no longer qualify, and ERISA Section 3(38) investment managers that make fund selection decisions for the plan.
Adding an independent fiduciary into the selection and monitoring of investments allows advisers and employers to focus on the objective of the retirement plan: building better outcomes for employees, says Jerome Ciaramitaro, an adviser with AXA Advisors LLC in Troy, Mich.
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Many employers dont understand their fiduciary responsibility.
When employers fail to exercise the required standard of care and adverse expenses or investment losses are incurred, they face liability and possible claims by employees for breach of fiduciary duty, Ciaramitaro says.
Paula Aven Gladych is a freelance writer based in Denver.
