The DOL has expanded the definition of fiduciary. More individuals are now fiduciaries than ever before. There’s more nationwide awareness of the “fiduciary” term and its corresponding fiduciaries.
Yet it appears that many fiduciaries are not receiving the message. A recent bulletin from J.P. Morgan shows that an “alarming percentage” of individuals who oversee company 401(k) or other defined contribution plans are not aware of their fiduciary status. Despite the greater attention paid to fiduciaries and the broader fiduciary standard now in effect, 43% of fiduciaries are STILL not aware they are fiduciaries. That is indeed alarming.
Are you among that 43%? If you are not – that is, if you are a fiduciary and aware of that status – J.P. Morgan found that you are much more likely to act in a fiduciary manner. For example, on average, you are more likely to be confident that your plan’s governance includes an appropriate process to monitor and document investment decisions. As the bulletin concluded: “those who are aware of their fiduciary status are more likely to employ prudent fiduciary practices than those who don’t think they are fiduciaries or are not certain of their status.”
Perhaps most importantly, it also found that “those who know they are fiduciaries are more likely to have a philosophy that supports proactively placing participants on a strong saving and investment path.” Those fiduciaries who know they are fiduciaries are significantly more likely to:
- automatically enroll employees;
- automatically escalate contribution rates; and
- use a Qualified Default Investment Alternative (QDIA).
What does this mean? Informed, educated fiduciaries are the best fiduciaries. By understanding their status, they are more likely to appreciate their responsibilities – as well as the risks of noncompliance. Take note: fiduciary risk is both considerably complex and simply manageable. That process starts with fiduciary education.