Continuous Education

Art by Pete Ryan

One of the biggest challenges now for retirement plan committees, and the advisers who serve them, is keeping up with regulatory changes, says Senior Managing Director Michael Annin of Mesirow Financial in Chicago. “In rapid succession, we had the SECURE [Setting Every Community Up for Retirement Enhancement] Act and the CARES [Coronavirus Aid, Relief and Economic Security] Act. Those are two pretty significant pieces of legislation, and sponsors need to understand what it all means for their plan,” he says.

Also crucial for committees to reflect on, says Summer Conley, a partner in Faegre Drinker Biddle & Reath LLP in Los Angeles, is the volume of defined contribution (DC) plan breach of fiduciary duty lawsuits currently in the courts. “Committee members should know what the issues are and what those mean for their plan.”

Once a committee and its duties are established, the members must learn their fiduciary responsibilities, advisers say. The first step can be explaining how the plan works at a high level—“its provisions, match, eligibility, and plan economics such as revenue sharing, fee leveling or other ways services in the plan get paid for,” says Timothy Irvin, director and corporate markets practice leader at Cammack Retirement Group in New York City. “They should also understand not only their own role and responsibilities, but also those of the vendors and the consultant.”

Educating new plan committee members, as well as providing ongoing education throughout the year for all members, is vital even though fiduciary training is not a requirement, says Joan Neri, counsel in Faegre Drinker Biddle & Reath LLP’s ERISA group, in Florham Park, New Jersey, and a columnist for PLANADVISER. “One of the first questions the Department of Labor [DOL] asks when conducting a plan investigation is whether the plan provides ongoing fiduciary training for committee members.”

‘Better Training, Better Decisions’

Ellen Lander, principal at Renaissance Benefit Advisors Group in New York City, says, “Given a fiduciary’s legal responsibilities under ERISA, we consider fiduciary training to be a requirement,” and her clients agree. “Every member of the plan committee must undergo fiduciary training when they first join the committee. Following the training, they’re required to formally acknowledge their acceptance of their obligations under ERISA and as a fiduciary to the plan. But training is not a one-time event, it’s an ongoing process.”

“Because committee members’ responsibilities are so enormous, we need to do a better job of training these fiduciaries to make better decisions,” says Joshua Itzoe, a partner and managing director with Greenspring Advisors in Towson, Maryland. The goal, he says, is to help the members “develop the competence and the mastery that enables them to be effective in their role.”

While John Barry, principal of JMB Wealth Management in Los Angeles, performs a fiduciary best practice overview for each client during his in-person annual review of its plan, sometimes the training is informal. “For us,” he says, “we have found that the most effective way is to be on call. Most things plan sponsors need help or advice on are unplanned. All of our plan sponsor clients have our mobile numbers and can call us whenever they need help. We’re on call 24/7. ”

Whether training is formal or informal, “two key ERISA fiduciary concepts should be highlighted,” Conley says. “First, when making fiduciary decisions, committee members must act in the interest of the participants and beneficiaries. Second is process.

“The committee must go through a good process, considering all of the relevant information for purposes of making fiduciary decisions,” she says. “These concepts should be intertwined with specific topics: understanding the fiduciary role; fiduciary governance; monitoring fees and service providers; plan documentation; fiduciary liability, including co-fiduciary liability; and prohibited transactions.”

Mark Olsen, managing director at PlanPilot, suggests incorporating fiduciary training into each quarterly committee meeting and, if warranted, to meet solely for ongoing fiduciary training. As part of the company’s 2021 planning initiative, “we surveyed a sampling of committee members, and a consistent theme was the desire to have an increased knowledge base on their fiduciary duties. The overarching response was ‘to understand the role of a fiduciary,’ but some of the finer points warrant dedicated dialogue, and [we] felt that a separate meeting dedicated to these topics would increase members’ comfort level.”