It allows employers to transfer the responsibility for selecting and monitoring funds to 401(k) Advisors; 401(k) Advisors accepts responsibility and discretion for the investment due diligence process under section 3(38) of ERISA, according to a press release.
The new service also provides support to retirement plan advisers as the industry prepares for new rules regarding fiduciary roles. The rules are scheduled to go into effect July 2011 and will, in part, require service providers to disclose whether they act as a fiduciary to a plan and in what capacity (see EBSA Answers Questions on Proposed Fiduciary Definition Change).“This 3(38) approach gives broker-dealers a way to support their retirement plan advisers by offering a means of addressing key aspects of new federal regulations,” said Bruce Shay, executive vice president, Securian Financial Group, Inc., in the press release. “It also helps clients clearly understand the role their service providers play in helping them meet their investment fiduciary needs. Providing investment fiduciary services may be subject to registration or other regulatory requirements. If you are affiliated with a firm as a Registered Representative or an Investment Adviser Representative, you should consult with your firm before providing these services or entering into an agreement with a plan sponsor.”