Step 3 Toward Fiduciary Wellness: Fiduciary Education & Training
The need for your trustees and committee members to receive fiduciary education and training is quite apparent when we take a step back and consider their day-to-day responsibilities that commonly take precedence over their management of your retirement plan. These individuals may be running your company, managing its finances, determining budgets, analyzing production and sales numbers, or focusing on maximizing margin. They may be managing a work crew, sales force, or production unit. They come in early, stay late, work on weekends, travel, and have enough responsibility and company pride that they definitely take their work home with them.
With all of that in mind, many do not have the time, energy, bandwidth, or interest in understanding the intricacies of the retirement plan industry and their fiduciary duties. As we referenced last week in Step 1 of this process, are your fiduciaries familiar with share classes, revenue sharing, proprietary funds, collective investment trusts, to vs. through glidepaths, managed accounts, and revenue equalization?
DOL: Need for Education. The Department of Labor raised a lot of eyebrows a few years ago when it began to ask, during the audit process, whether plan trustees had received fiduciary training. In some instances, it asked for proof, including copies of materials. Many plan trustees could not provide the desired answer. After all, nothing in ERISA requires fiduciary training. Yet it became apparent that the DOL thinks it to be important.
Procedural & Substantive Value. Following the DOL’s expression of interest in fiduciary training, it became apparent that your trustees could receive procedural and substantive value through training. The procedural aspect would situate you to answer the DOL’s inquiry in the affirmative. It feels better to tell the DOL, “Yes, we have, and here are the materials”, than to answer “No.”
But the substantive value is of greater importance. How can we ask your employees to serve as plan trustees, to accept fiduciary responsibility, and to put their personal assets at risk, without clearly explaining those responsibilities, helping them to understand ERISA’s standards, and giving them the tools to understand the fulfillment of those responsibilities? The failure to do so is simply not right. Your trustees not only need the training and education, they deserve it.
Fiduciary Education Curriculum. We recommend that your trustees and committee members receive their training in several phases as a part of an ongoing process. It should start with a “fiduciary fundamentals” course that gives them ERISA’s nuts and bolts. It defines their core responsibilities and applies those to the processes currently in place. The next step should include ongoing education that helps them to proactively learn about regulatory initiatives, litigation filings, and industry hot topics. This may occur through newsletters, blogs, or, best yet, within your trustee reviews. Finally, when you add a new trustee or committee member, we recommend keeping in mind that they should be brought up to speed by receiving the same information the others have already received.
Closing Thoughts. Please focus on one key statement from above: your trustees not only need the education, they deserve it. You’re asking them to accept an important responsibility and to assume potentially significant personal financial risk. Be sure they have the tools to fulfill that responsibility and to best manage that risk.
Matthew loves to write. He also loves to think, though he’s probably a better writer than a thinker. He does not like to be on camera or in videos. This blog will allow him to write, challenge his ability to think, and, from time to time, test him with video blog entries.
He has a unique blend of legal and practical experience that helps us to serve our clients well. On the one hand, he has more than 12 years of private legal practice experience focusing exclusively on employee benefits, including time as a partner in an employee benefits boutique where he has represented clients in front of the DOL and IRS. On the other hand, he holds his FINRA Series 7 and 66 registrations and serves as the Director of ERISA Services for Qualified Plan Advisors.
Matthew likes to stay active. He provides fiduciary training, Investment Policy Statement design, and vendor oversight to our clients. He is an active member of the Employee Benefits Committee of the American Bar Association Tax Section, serving as Chair of the Defined Contribution Plans Subcommittee. He also has been appointed to the IRS TE/GE Gulf States Council and is a frequent speaker on regulatory developments, fiduciary responsibilities, and retirement readiness.
Most importantly, he stays active with his family. His wife, Laura, is the founder of REbeL, Inc., a not-for-profit organization. His three young boys are mixed up in far too many sports, and they enjoy traveling, watching college football, running with Dad, and rooting for the Huskers.
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