PSNC 2014: Your Fiduciary Checklist

June 6, 2014 ( - At the close of the 2014 PLANSPONSOR National Conference five items rose to the top from the content covered during the conference that should be on your fiduciary checklist, according to Alison Cooke Mintzer, Global Editor-in-Chief of PLANSPONSOR.

By Judy Faust Hartnett | June 06, 2014
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These points were discussed with Josh Itzoe, partner and managing director, Institutional Client Group, at Greenspring Wealth Management; Jeb Graham, retirement plan consultant and partner at CapTrust Advisors LLC; and R.Charles “Chuck” Tschampion, director, Special Projects, at the CFA Institute.

Properly structure and equip your committee.

“To begin with create a committee charter. Go through a formal process determining the criteria for who should be on the committee,” Graham said.  Itzoe added, “Great plans come from great committees. It’s important to pick the right folks. The best committees have somewhere around three to seven people. With more than seven committee members, nothing will get done. Make sure the people chosen are committed. Have them acknowledge what being a committee member entails. Then pick a meeting schedule and put it on the calendar otherwise the meeting will get pushed. After the right team is selected, educate them about their fiduciary responsibilities.” 

“Fiduciary prudence is a process,” Tschampion said. He noted the CFA Institute has produced a primer on the Pension and Trustee Code which includes principals such as putting the participant first. It’s available on their web site and written from the stand point of a new trustee and what it is they have to confront. It can also help create the committee charter. In addition, according to Tschampion, the institute has a monograph primer from the standpoint of a new trustee and various things they will confront and what they should ask. “It’s more important to know what you have to ask and think about rather than think you have all the knowledge.” 

Ensure the plan is operated in accordance with plan documents and all applicable legal/regulatory requirements.

“While the risk of litigation is very low, there is a lot of fear mongering about fiduciary liability. If you have processes and you follow those processes you are going to fulfill your duties. We feel the bigger problem for plan sponsors are operational failures and we also feel that the sign of a healthy plan is to have a process in place to find operational failures and to fix them and avoid them in the future. Make sure you read your plan documents and your summary plan description and that they align.  Not understanding eligibility or if deferral amounts are too high or too low, are examples of things that can go wrong. You have to step back and understand the operational processes,” Itzoe said.

Graham concurred and added, “Most committees are well intentioned but all of a sudden they may realize it’s been years since they’ve amended their documents. I see this all the time with new clients.  We come in and create calendars with all necessary tasks scheduled out, plus we take on responsibility for keeping clients apprised of changes in regulations, for instance the Windsor change. Investment policy may be visited in the first quarter, and plan design in the second quarters and so on. It forces you to assess all areas. You have to have a process and a methodology to look at everything on a consistent basis.”