Curing Fiduciary Pain

If you are a fiduciary to a retirement plan, then like most, you have felt the burden of your duties more acutely in recent years. The Pension Protection Act changed many of the ground rules and ERISA class action litigation has become a real threat.  The weight of these forces is mounting. If you are wondering how to evaluate your risk as a fiduciary, you are not alone.

For corporate executives and boards of directors, measuring performance is a primary discipline for creating and maintaining a successful business. Yet these same executives, who function as retirement plan fiduciaries, often lack appropriate measurements for determining if their retirement plans are successful, and equally important, how great is their fiduciary risk.

A recent article in Plan Sponsor magazine, titled “Statistics of Success” by the nationally recognized ERISA attorney, Fred Reish, posed the salient question: “What are the measures of success for your 401(k) plan?” He then pointed out “There is only one true measure of the success of your 401(k) plan: whether your plan is providing adequate retirement benefits for your participants.”

Reish recommended using three “pillars” on which to build a successful plan. They include: 1) participation levels; 2) deferral rates; and 3) the quality of participant investing.

In order to build each of these pillars, plan fiduciaries must adhere to defined practices in a consistent process.  In some circles this process is called a system.  In others, it’s called a recipe.  Similar to making your favorite chocolate chip cookies, you can’t miss an ingredient and expect to get the same sweet, chewy outcome.  Similarly, companies that manufacture products can’t expect to produce the same quality product if they don’t follow a quality system.  In fact, most corporate purchasers require manufacturers to certify their systems against a standard such as ISO-9000.

Let’s put this into perspective.  While ERISA and the courts don’t mandate specific investment and asset allocation strategies for public pension funds and corporate retirement plans, ERISA and the courts do mandate a prudent process.  For endowments and foundations, recent legislation requires new levels of investment fiduciary care and competence.

Regardless of which entity you serve, you may be wondering then how do I measure success?  And now, to the more poignant question, is there a recipe or a system to help lead our plan to success and ensure protection for our fiduciaries?

Yes there is.  Roland|Criss is helping transform the investment fiduciary community with a system that defines the process, measures success, and reduces risk.

Roland|Criss’ system ensures fiduciary protection by actively training, equipping, and implementing fiduciary best practices for retirement plan sponsors and trust entities.  Roland|Criss does not manage investment assets or sell financial products.  As a result, we are free from fee conflict and serve in an unbiased fiduciary oversight capacity for trustees and trustee committees.

It is important to note that Roland|Criss is the first global organization to assist investment fiduciaries (i.e., Investment Advisors, Investment Stewards, and Investment Managers) acquire a fiduciary identity that conforms to the highest level of conduct – the Global Fiduciary Standard of Excellence.

This approach fulfills Galileo’s mandate to “measure what is measurable and make measurable what is not so.” Now the success of a 401(k) plan can be meaningfully measured with an eye towards the end result—providing participants with adequate retirement benefits and protecting fiduciaries in the process.