Critical questions for plan sponsors: Is your advisor serving as a plan fiduciary?

Am I Invested Properly

In order to know if your financial advisor is serving as a fiduciary and acknowledging such in writing, you’ll first need to understand what a fiduciary is. According to, a fiduciary is, “a person to whom property of power is entrusted to the benefit of another.”

For a company retirement plan, it’s important to know who the plan fiduciaries are. The sole purpose of the plan’s fiduciary is to put the interest of the plan participants and the beneficiaries first in the case of a 401(k) or 403(b) plan. A fiduciary must make sure what they do is in the participants’ best interest, which may or may not necessarily be in their own best interest.

A plan sponsor, business owner, anyone that sits on a retirement plan committee, or your financial advisor to the plan can be a fiduciary. However, a financial advisor can choose whether to take on additional fiduciary responsibility for the plan, while a plan sponsor, business owner or retirement plan committee person is de facto a fiduciary, because they already have the plan beneficiaries’ best interest in mind.

The benefit to designating your financial advisor as your plan fiduciary is that they are required by law to act in the best interest of the plan and the participants. Any changes or recommendations made by that person is understood to be benefiting or making the plan better for participants.

In the plan service agreement it should be stated very clearly if an advisor is acting as the plan’s fiduciary or not. If you still aren’t sure, just ask your advisor! If they are not, ask them why they are not and if they would be willing to assume additional fiduciary responsibilities for the plan. If the answer is no, it might be time to consider looking for an advisor who is willing to act in that capacity. In the end, it will be beneficial to you and the other plan participants.

Nathan Boxx, Bradley Newman, Jason Seltzer

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