Reduce Your 401(k) Fiduciary Risk

If you make decisions for your company’s retirement plan, you are a fiduciary.

Are you prepared to accept personal liability for your company’s retirement plan?

As someone who makes decisions for your company's retirement plan, you’re vulnerable to fiduciary risk. This means that administrative, operational, and investment management duties must be carried out diligently and in the best interest of employees, otherwise you're personally liable. That's a big responsibility, but you do have options. Many business owners and HR professionals aren't investment experts. To reduce their risk and ensure the health and safety of their retirement plan, many businesses outsource fiduciary responsibility.

  • What is a Fiduciary
  • Fund Selection Process
  • Comparison Chart
  • Legal Obligations
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A Trusted Decision Maker

A fiduciary has important decisions to make. Retirement plan participants are counting on the fiduciary to protect their savings and provide investments that are managed with their best interest in mind.

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View Transcript For the Fisher’s Rigorous Lineup video

Fisher’s Rigorous Lineup

We use a multi-level process to analyze and monitor more than 25,000 funds. The result? The best of the best investments for retirement plan participants.

Fiduciary Comp Chart

Tracking Your Responsibilities

The amount of fiduciary responsibility you take on is up to you. But if you're not prepared for time-consuming and potentially confusing plan management tasks, you can work with a retirement plan professional, who can take on the burdens and liabilities of a fiduciary.

Hiring a CEFEX® certified ERISA 3(38) Investment Manager like Fisher Investments reduces your liability for investment decisions and takes work off your plate so you can focus on running your business.

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Understanding Your Risk

In 2022, the Department of Labor recovered more than $1.4 billion from business owners and other fiduciaries for violations. Fiduciary mismanagement can cost a business tens of thousands of dollars in legal fees and fines. The better you understand your risk, the more you can do to minimize it.

Compare Fiduciary Options

3(21) Investment Advisor

A co-fiduciary who makes investment recommendations. The sponsoring company remains liable for decisions.

3(38) Investment Manager

A fiduciary who takes legal responsibility for investment management decisions. The sponsoring company is not liable for the manager’s decision.

CEFEX Investment Manager

A CEFEX® certified fiduciary (awarded to the top 1% of plan advisors) who takes legal responsibility for investment management decisions. The sponsoring company is not liable for the manager’s decisions.

401(k) plan fiduciary checklist

You Don't Have to Manage Your Plan Alone

Every retirement plan has a plan fiduciary -- someone who’s responsible for administrative, operational, and investment management. If these responsibilities aren’t carried out diligently and in the best interest of employees, the fiduciary is personally liable. Last year, the Department of Labor recovered more than $1.4 billion from business owners and other fiduciaries for violations. Download the checklist to learn how to manage your fiduciary risk.

Three Types of Fiduciaries
View Transcript For the Three Types of Fiduciaries video

Three Types of Fiduciaries

When hiring a plan advisor, you typically have three options; a 3(38) investment manager, a 3(21) plan advisor or a non-fiduciary advisor. It’s important to understand the differences so you can select the option that best aligns with your retirement plan needs. In this short video you'll learn the roles of each type of fiduciary adviser and what makes Fisher different from most other advisers.

More Fiduciary Resources

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3(21) vs 3(38) 

Managing the investments for your company’s 401(k) plan comes with risks and responsibilities. The good news is you don’t have to go it alone. Learn the difference between a 3(21) and a 3(38).

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Outsource Fiduciary Liability

When an employer offers a 401(k) on behalf of their employees, they take on more legal risk than they often realize. Learn the 3 steps for business owners to outsource 401(k) fiduciary liability.

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What is a 3(16)?

There's more than one kind of fiduciary. Learn about fiduciaries who take the administrative burden off your shoulders.

Frequently Asked Questions About Fiduciaries

The word "fiduciary" is legalese, but the concept is simple. If you're a decision maker on your company 401(k) plan, you're responsible for doing right by your employees. Learn more about the responsibilities that come with being a fiduciary and how to manage them.

  • What Is a 401(k) Fiduciary?

    If you make decisions for your company’s 401(k), you are a fiduciary. Every retirement plan needs at least one trusted, reliable fiduciary, someone who works in the best interest of the plan and its participants. To better understand your role as a fiduciary, consider these common questions.

  • What Is Fiduciary Responsibility?

    As a fiduciary, you’re expected to act prudently and to consider how your decisions will affect plan participants. It also means you need to have administrative systems in place that document your decisions and communicate important details to participants. If you don’t meet your fiduciary responsibilities, you may be liable for harm caused by your decisions. Fiduciary mismanagement could cost you and your company tens of thousands of dollars in legal fees and fines.

  • What Is Fiduciary Liability?

    Being a fiduciary means you’re liable if something goes wrong with your plan. When considering your liability, understand:

    • Ignorance is no defense in a court of law.
    • A fiduciary is personally liable to make good on plan losses due to an ERISA provision breach.
    • The Department of Labor may assess a civil penalty equal to 20% of the recovery amount.
    • Individuals may be fined up to $100,000 and jailed up to 10 years for ERISA violations.
    • Companies may face up to $500,000 in fines for ERISA violations.
  • What Are the Different Types of Fiduciaries?

    There are three types of retirement plan fiduciaries.

    • A 3(38) investment manager is a fiduciary who is responsible for plan investment decisions. Your responsibility is to select and oversee your fiduciary.
    • A 3(21) investment adviser is a co-fiduciary, which means they make investment recommendations, but the ultimate decision is up to you and you’re still responsible and liable for the decisions made.
    • A 3(16) administrative fiduciary is responsible for fulfilling specific administrative duties on behalf of the plan. For example, a 3(16) administrative fiduciary signs and files Form 5500 with the Department of Labor and approves loans.
  • Can I Outsource Some Fiduciary Duties?

    Yes, you can outsource many fiduciary duties including investment management and administrative tasks. Outsourcing fiduciary duties can reduce both your liability and administrative burden. Some retirement plan providers, third-party administrators, or record keepers offer fiduciary services. If you consider outsourcing with a fiduciary, find out exactly what services they offer and what responsibilities remain with you. Some leave critical duties up to you. Watch out for fiduciaries who:

    • Have incentive structures that include revenue sharing or kickbacks.
    • Don’t help and maintain a fiduciary audit file.
    • Don’t offer fiduciary education for your plan committee.
  • How Can Fisher Help?

    As a 3(38) investment manager, Fisher maintains the highest fiduciary standards and will partner with you to make sure you, your company, and your employees are protected.

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Contact Us

One of our 401(k) business specialists would love to talk to you about your company’s retirement plan needs.

Call Us

(844) 238-1247

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