Small Business Owners: Fiduciary Responsibilities and the Power of Outsourcing

As a small business owner, you wear many hats. From CEO to janitor, you’re often juggling numerous responsibilities. One crucial role you might not fully appreciate is the fiduciary responsibilities you hold for your company’s retirement plan.

What Does It Mean to Fulfill Fiduciary Responsibilities?

A fiduciary is a person who has a legal and ethical obligation to act in the best interests of another party. As a plan sponsor, you are a fiduciary, responsible for managing your company’s retirement plan. This responsibility comes with a set of duties and obligations.

The Five Key Fiduciary Responsibilities of a Plan Sponsor

  1. Plan Design and Implementation: You must establish a plan that meets ERISA requirements and aligns with your company’s goals and employee needs.
  2. Investment Selection: Carefully select investment options that are prudent and appropriate for your plan participants to fulfill your fiduciary responsibilities.
  3. Fee Monitoring: Regularly monitor and review plan fees to ensure they are reasonable and competitive.
  4. Participant Education: Provide employees with the information and tools they need to make informed decisions about their retirement savings and their own fiduciary responsibilities in managing the plan.
  5. Plan Monitoring and Compliance: Stay current with ERISA regulations and ensure your plan complies with all applicable laws and regulations.

The Power of Outsourcing Fiduciary Responsibilities

While these responsibilities may seem daunting, you don’t have to shoulder them alone. Outsourcing to a fiduciary plan advisor can significantly alleviate your burden and help you fulfill your fiduciary responsibilities effectively.

The Role of a Fiduciary Plan Advisor in Navigating Your Fiduciary Responsibilities

A fiduciary plan advisor can act as either an ERISA 3(21) or 3(38) fiduciary. In either role, they are responsible for making prudent investment decisions on behalf of the plan. This includes selecting investment options, monitoring fees, and conducting regular reviews.

Other Key Roles in Your Retirement Plan

  • Recordkeeper: The recordkeeper handles the administrative tasks of the plan, such as processing enrollments, loans, and distributions.
  • 3(16) Plan Administrator: This individual or firm is responsible for day-to-day plan administration, including processing participant transactions and providing customer service, all in line with fiduciary responsibilities.

The Importance of Shopping Your Plan

Just like you shop for the best deals on other business expenses, you should also shop your retirement plan. By periodically reviewing your plan’s fees and investment options, you can ensure that your employees are receiving the best possible value.

Take the Next Step

If you’re a small business owner seeking to fulfill your fiduciary responsibilities effectively, consider outsourcing to a qualified fiduciary plan advisor. By partnering with an expert, you can protect your business, your employees, and your own financial future. Here at nVest Advisors, we specialize in working with small business owners to maximize their plan’s potential benefit for your employees, while working to protect the business from regulatory or civil problems that may arise from a plan that was poorly constructed or not correctly administered.

Ready to take the next step? Schedule a free virtual Q&A appointment with Jeremy Torgerson, our Senior Advisor and CEO, for a competitive bid on your company’s retirement plan. Let us help you navigate the complexities of ERISA and ensure your plan is designed to meet your employees’ needs.