Hauser Insurance Advice on Limiting Fiduciary Liability Risks

The maintenance of good levels of fiduciary oversight is important when it comes to running another business entity’s investment program. On the basis of Hauser Insurance, this is especially true as 401(k) plan sponsors make investment decisions that affect the employee retirement plans of their client firms. The last few years have seen an increase in class-action lawsuits involving ERISA (Employee Retirement Income Security Act). It is highly advisable for sponsors to seriously consider additional strategies with the aim of minimizing their risks.

One of the strategies that should be considered by a plan sponsor is the completion of ongoing training concerning its fiduciary obligations. The company’s policies and rationale used in making particular investment decisions should be documented. Full transparency about the fees of the plan should be provided by the sponsor.

On the basis of Hauser Insurance, following ERISA standards, a plan sponsor can also delegate certain fiduciary obligations to third parties such as an investment manager or a plan administrator. The third party is to maintain complete authority over the investments of the plan. A thorough review of the plan administration candidates by a plan sponsor is crucial in ensuring that ERISA standards are met.

A written IPS (Investment Policy Statement) helps in establishing a structure that promotes fiduciary oversight. This document also forms an excellent basis on which future investment-related decisions are made. According to Hauser Insurance, the document should briefly summarize the careful processes used by the organization in the monitoring and selection of its investments. It should also outline the manner in which the plan sponsor oversees the performance of any third-party service providers.

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