<< back to Retirement Plan Basics

Why should I care about fiduciary responsibilities?
Because you have the opportunity to control the retirement investment vehicle for yourself and your employees. Also there can be serious repercussions for ignoring fiduciary duties, including heavy fines and possibly even jail.

A recent Nationwide Financial study found that while small business owners may be confident about their role as fiduciaries, many report critical lapses in at least one aspect of fiduciary knowledge.

• They don't realize they hold primary fiduciary responsibility. A large percentage incorrectly identified the plan investment provider, the financial advisor, and even employees as having this role.
• They fail to evaluate investment selections regularly. Sixty-one percent of those with 401(k) plans reported they have an investment policy statement in place, but fewer reported having a formal process to evaluate investment selections on a regular basis.
• They do not question the risk of required funds. More than one-third consider it acceptable for a provider to limit the fund options available to a plan by requiring that its own funds be selected.

Half of all small business owners surveyed say fiduciary and legal responsibilities are a top concern, and a similar number reported increased employee concern about their retirement plan investments in the last year. But only one in five have taken steps in the past year to increase fiduciary oversight, including switching companies or consulting with a professional.

The good news is that, in most situations, fiduciary responsibilities take less than an hour a month to fulfill, and the benefits of offering a plan far outweigh the disadvantages. It's like exercise - it takes a little time each day, but you do feel good about the results. Your investment professional and plan provider should be able to provide resources that support you in fulfilling your duties. Staying aware of your fiduciary responsibilities, and taking the proper steps today will save you trouble tomorrow.

<Back to top>