I was shocked and discouraged to read this article last week that awareness of fiduciary responsibility within corporate retirement plans appears to be decreasing. AllianceBernstein recently surveyed more than 1,000 executives and asked if they were plan fiduciaries to their corporate plan. 6% didn’t know, and 49% didn’t consider themselves fiduciaries. Here’s the catch – each of the people surveyed were actually fiduciaries when they were surveyed.
It’s hard to believe that executives’ awareness of their fiduciary responsibilities is actually getting worse rather than better. For instance, in 2011, 61% of people surveyed correctly identified themselves as fiduciaries. What’s also surprising is that fiduciaries at larger companies were hardly more knowledgeable than smaller companies. A case in point is that 48% of respondents from plans with more than $500 million in assets mistakenly believed they were not fiduciaries. With the increased litigation focus on large plans, especially about fees, you would think that awareness would be even more heightened. Further, the DOL Fiduciary Rule was front and center for much of 2016 and 2017.
Clearly, we as an industry have more work to do in terms of education, and companies need to wake up to their corporate responsibilities and the duty they owe their employees. Employees depend on the people responsible for their retirement savings (i.e., the plan fiduciaries) to do a better job making decisions that impact them and their future. However, they actually have very little say and control over their retirement plan, apart from deciding to participate, choosing how much to save, and selecting investments from the option made available to them. The plan fiduciaries determine nearly all the decisions of consequence. For instance, the company chooses the vendors, fees, investments, communication, education, and advisory services. And that’s why it’s so critical that plan fiduciaries embrace this role and do the job well. The financial future of their friends, colleagues, and co-workers depends in large part on them.
An engaged, knowledgeable, and capable group of decision-makers (e.g., a retirement plan committee) will generally yield far greater outcomes for their employees than a disengaged, unaware, and ineffective group. With so much at stake, both from a corporate/legal standpoint and from a human capital perspective, companies have a fiduciary imperative to do better. But it all starts with awareness and education in the form of robust fiduciary training. Interestingly, roughly half the respondents to this survey who had access to fiduciary training didn’t think it was comprehensive enough.
At Greenspring Advisors, we’ve been providing fiduciary training to our plan committees for more than a decade. In fact, it’s one of the first things we do when kicking off a new relationship. However, we recently upped the stakes by developing, in consultation with Fred Reish from Drinker Biddle, a comprehensive online ERISA fiduciary training curriculum called Fiduciary U™. It’s a great way for retirement plan fiduciaries to get trained to do their job well. If you or anyone you know at your company has any responsibility for the corporate retirement plan, you should sign up for the course.
In roughly 90 minutes, you’ll develop an in-depth understanding of your fiduciary responsibilities under ERISA, you’ll learn ways to minimize your personal and corporate liability, and you’ll be in a much better position to make prudent decisions for your company and your employees. Knowledge is power. Also, if you’re an HR professional, you’ll be able to earn continuing education credits as well. Learn more and sign up at www.fiduciaryu.com. If you’re a plan fiduciary, you owe it to yourself, your company, and your employees.