Why Retirement Plan Sponsors Shouldn’t Only Focus on Low Fees

Ary Rosenbaum

While paying unreasonable plan expenses is a breach of fiduciary duty, picking providers solely or mainly because they are low in fees can also breach the fiduciary duty. Retirement plan sponsors also have a duty of prudence as a one of their fiduciary duties. Prudence is about the process for making fiduciary decisions. Prudence requires the plan fiduciaries to document decisions and the basis for those decisions. Since most plan sponsors don’t have the background to administer their retirement plan and make investments on their own, they need to hire the expert plan providers that can. So in hiring any plan provider, a fiduciary should survey a number of potential providers. By doing so, a fiduciary can document the process and make a meaningful comparison and selection. The duty of prudence requires the selection of competent plan providers and selecting an incompetent provider is a certain breach of that duty. So a plan provider needs to select competent plan providers that charge reasonable expenses.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ary Rosenbaum, The Rosenbaum Law Firm P.C. | Attorney Advertising

Written by:

Ary Rosenbaum

The Rosenbaum Law Firm P.C. on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.