Fiduciary

Being a Retirement Plan Fiduciary is Really, Really Easy if you IEJ

IEJ.  Identify, Explain, Justify.  Just what this industry needs, another acronym!  This is our code for the simple exercise you can do to be a smart retirement plan fiduciary.  If you can identify, explain, and justify the decisions you make on your plan and the costs that you pay, then we think it is easy to be a good, smart fiduciary.  Maybe not really, really easy, but we wanted to get your attention.

Of course, running a retirement plan is a serious and important responsibility.  The most obvious reason for this is that it has to do with your employees’ money and their future – which, ya know, is kind of important to them!  You certainly don’t control the decisions they make, how much they spend, how much they save, and their other life choices that impact their future.  But you do control the type of plan they can save and invest in and the quality of the guidance and advisement they receive. This is a big deal – it matters and will have an impact on their life!

In addition, there is the whole Department of Labor and ERISA and IRS stuff as well – regulations and compliance – the legal issues.  You would usually see the words, risk, liability, etc… associated with this.  So doing the right thing for your employees is not just good for them, but it will also cover your…

For example, let’s say that you have been working with a specific broker, or advisor, for more than 10 years and have never considered alternatives.  Would you be able to justify that?  Maybe, maybe not. On the other hand , if you have a documented review process that explains and justifies why you continue to work with the same broker, then you are probably fine.  Or let’s say that you want to offer your employees a Managed Investment Program inside your retirement plan (we’re not big fans of those, but they are common in the industry and can help some people better invest their assets).  Are you able to explain how you picked the program, what it’s cost is, and why you are offering it – how do your employees’ benefit from it?

So when you think of your decisions that you have made on your plan, and the costs that you are paying, ask yourself if you can identify, explain, and justify them. If you can (and it helps to document this), then you are probably in good shape!