The Focus on the Fiduciary is Increasing

As the 401(k) system moves from implementation to oversight, the focus on the fiduciary is increasing. The early decades of the 401(k) age were focused on plan design, administrative infrastructure and education. The fiduciary function, while important, received less attention until the late 1990s. This was due to low average account balances and the sponsor focus on designing plans that would attract employee support. Also, providers needed to develop the infrastructure necessary to deliver flexible, high quality service at a price that even small companies and their participants could afford. While we want plan design, infrastructure, education and participation to continue to improve, at this point nearly all companies of any size have plans in place and employee support for the system is high.

Attention has shifted to the sponsor’s fiduciary role. Pressing for this change were several key events and one reality. The events were: the dot.com bust, the tragedy of 9/11, the financial scandals of the 2000/2002 period and the recent global financial meltdown. The reality is the increase in assets accumulating in the system. In the early days of DC plans, the average account balance size in most plans was small, often $20,000 or even less. Today, the average account balance is $100,000 or more. When average account balances were low and before the shocks to our confidence in the financial future most companies did not have investment policy statements and gave the plan investments a cursory look annually.

That has changed. Plan sponsors now know that if they are going to act in the best interest of their participants they must take a more active fiduciary approach. And they are. According to PSCA surveys, 86% of plans now have investment policy statement (up from 54% in 1999.) Investments are monitored on a quarterly basis 64% with only 18% reviewing their plan assets annually. Fee audits are becoming routine and 67% now retain an independent investment advisor. Today's fiduciary must spend more time and be more knowledgeable than ever before. DOL is also getting into the act. Increasingly a DOL plan audit includes a question asking what training has been provided for the plan’s fiduciaries.

PSCA has responded to this change by developing a certification program for plan fiduciaries. Trusted plan sponsor industry leaders working with leading ERISA attorneys have developed a comprehensive self-study online training program designed for members of fiduciary committees and other employees who have primary responsibility for the operation of their companies ERISA plans. According to Tom Mess of The Proctor and Gamble Company “The PSCA ERISA fiduciary training gives you the peace of mind you want at an attractive price. It's a smart choice for staying on top of your plan.”

If you are interested in this new PSCA program please call (312) 419-1863 or e-mail fiduciary–[email protected] for additional information.