6 Benefits of Working with a True 3(38) Investment Fiduciary
When managing retirement plans, companies often seek fiduciaries to ensure compliance and protect participants’ interests. A 3(38) fiduciary holds discretionary authority over investment decisions, offering expertise that can significantly benefit their employees. This arrangement helps businesses focus on their core operations while leaving investment management to professionals who prioritize the best interests of plan participants.
Working with a 3(38) fiduciary offers unique advantages for both employers and employees. From reducing the employer’s legal risks to improving transparency, this partnership ensures that retirement plans are carefully managed. Understanding the full benefits of such an arrangement can help businesses make informed decisions that protect their employees’ financial futures.
1. Gain Control and Freedom in Investment Decisions
One of the most significant benefits of functioning with a 3(38) fiduciary is transferring discretionary control over the retirement plan’s investments. This fiduciary has the power to make decisions on behalf of the plan sponsor, which means they can manage and monitor the investments without the need for constant approval or involvement from the employer. This reduces the administrative burden for employers and ensures that investment choices are made with the best interest of the employees in mind.
2. Lower Your Legal and Financial Risks
Employers often worry about the legal and financial risks of managing a retirement plan. Companies can significantly reduce their potential liability by hiring a 3(38) fiduciary. Since the fiduciary assumes responsibility for investment management, they handle the compliance, monitoring, and risk associated with the plan. This can protect the employer from costly legal battles and regulatory penalties, offering peace of mind while ensuring the plan complies with all legal requirements.
3. Expertise and Ongoing Monitoring for Consistent Success
A 3(38) fiduciary typically brings extensive experience in investment management to the table. They are well-versed in portfolio construction, risk management, and compliance issues. With their expertise, employers can rest assured that the plan’s investments are carefully chosen, properly managed, and consistently monitored. This ongoing oversight is critical to ensuring the retirement plan stays on track and meets its objectives, helping employees work toward their retirement goals.
4. Expanded Investment Options for Greater Diversification
When employers collaborate with a 3(38) fiduciary, they often gain access to a broader range of investment options than they would have on their own. Fiduciaries typically have established relationships with investment managers and funds, which means they can offer higher-quality options for plan participants. These expanded choices allow employees to diversify their portfolios and select investments aligning with their retirement goals for better long-term outcomes.
5. Enjoy Clear Transparency and Better Reporting
Transparency is essential to any retirement plan, and operating with a 3(38) fiduciary improves this aspect significantly. A true fiduciary must provide clear, detailed reports on the plan’s performance, fees, and investment strategies. These reports ensure that employers and plan participants are fully informed about their investments’ performance. This level of transparency helps employees make more informed decisions and ensures trust in managing their retirement savings.
6. Focus on the Best Interests of Plan Participants
A key benefit of functioning with a 3(38) fiduciary is their commitment to acting in the best interests of plan participants. They focus on:
- Maximizing returns
- Minimizing risks for employees
- Helping participants reach their long-term goals
Employers benefit by having an experienced fiduciary manage the plan to meet regulatory requirements, offering peace of mind. This approach ensures the retirement plan is managed effectively, providing strong financial guidance for participants.
Working with a 3(38) fiduciary brings numerous benefits, from reducing the employer’s administrative burden to offering enhanced investment options. By transferring investment decision-making responsibilities to a fiduciary, employers can focus on other business areas while ensuring their employees’ retirement plans are well-managed. This collaboration ensures lower risks, higher transparency, and better participant outcomes.