Retirement Plan Fidicuiary Services

Keeping it simple for a fiduciary to a retirement plan means adhering to the principle of simplicity in managing retirement plans. It involves taking a straightforward approach to decision-making, avoiding unnecessary complexity and jargon, and focusing on what’s most important for the plan participants.

A fiduciary who keeps it simple will prioritize clear communication, transparency, and consistency in their dealings with retirement plans. They will strive to simplify the investment options, minimize fees and expenses, and ensure compliance with regulatory requirements. By simplifying the retirement plan management process, a fiduciary can reduce confusion and increase the likelihood of positive outcomes for plan participants.

 A revitalized retirement plan from a fiduciary’s perspective looks like a retirement plan that is well-managed, compliant, and effective in helping plan participants achieve their retirement goals. Here are some key features that a fiduciary may consider when revitalizing a retirement plan:

1. A clear investment strategy: A revitalized retirement plan will have a clear investment strategy that is aligned with the goals and risk tolerance of the plan participants. The fiduciary will regularly monitor and adjust the investment strategy to ensure it remains relevant and effective.

2. Diversified investment options: A revitalized retirement plan will offer diversified investment options that meet the needs of a broad range of plan participants. The fiduciary will work to ensure that the investment options are competitive in terms of fees, performance, and risk.

3. Transparent and fair fee structure: A revitalized retirement plan will have a transparent and fair fee structure that is clearly communicated to plan participants. The fiduciary will work to minimize fees and expenses while maintaining the quality of the plan’s offerings.

4. Effective plan governance: A revitalized retirement plan will have effective plan governance that includes regular oversight and monitoring by the fiduciary. The fiduciary will ensure that the plan is compliant with regulatory requirements and that any potential issues are addressed promptly.

5. Clear communication and education: A revitalized retirement plan will have clear communication and education strategies that help plan participants understand the plan’s features, benefits, and investment options. The fiduciary will work to ensure that plan participants are well-informed and empowered to make informed decisions about their retirement savings.

Overall, a revitalized retirement plan from a fiduciary’s perspective is one that is well-managed, transparent, and effective in helping plan participants achieve their retirement goals.

When it comes to managing a retirement plan, employers may choose to work with a 3(21) fiduciary and/or a 3(38) fiduciary. Here are the benefits of each:

3(21) Fiduciary:

• A 3(21) fiduciary is an investment advisor who provides advice and recommendations to the employer regarding plan investments, but the employer remains ultimately responsible for selecting and monitoring the investments.
• The employer retains control over investment decisions and can decide whether or not to follow the 3(21) fiduciary’s recommendations.
• A 3(21) fiduciary can provide valuable expertise and guidance to help the employer select and monitor the plan’s investments.

3(38) Fiduciary:

• A 3(38) fiduciary is an investment manager who has discretion over the selection and monitoring of the plan’s investments.
• The employer transfers the responsibility for investment decisions to the 3(38) fiduciary, who is then responsible for selecting, monitoring, and making changes to the plan’s investments.
• A 3(38) fiduciary can provide greater protection for the employer by assuming the fiduciary responsibility for investment decisions, which may reduce the employer’s liability.

Overall, the benefit of hiring a 3(21) fiduciary is that the employer retains control over investment decisions and can choose whether or not to follow the fiduciary’s advice. The benefit of hiring a 3(38) fiduciary is that the employer can transfer the responsibility for investment decisions to the fiduciary, which may reduce the employer’s liability. The choice between a 3(21) fiduciary and a 3(38) fiduciary ultimately depends on the employer’s preferences and needs, as well as the expertise and experience of the fiduciary.

It can be a conflict of interest for a retirement plan fiduciary to work with individuals outside of their fiduciary role because it may create a situation where the fiduciary’s interests are at odds with the interests of the retirement plan participants.

As a fiduciary, the primary duty is to act in the best interests of the retirement plan participants and beneficiaries. This duty includes making decisions that are solely in the interest of the plan, avoiding conflicts of interest, and acting with prudence and loyalty.

When a fiduciary works with individuals outside of their fiduciary role, it can create potential conflicts of interest. For example, a retirement plan fiduciary who also works as a financial advisor may be tempted to recommend investments or services to retirement plan participants that benefit both the participant and the fiduciary’s personal financial interests.

This type of conflict of interest can result in the fiduciary making decisions that are not solely in the best interests of the retirement plan participants, which is a violation of their fiduciary duty. It can also result in a loss of trust and credibility with plan participants, as well as potential legal and financial consequences for the fiduciary.

For these reasons, it is generally recommended that retirement plan fiduciaries do not work with individuals outside of their fiduciary role to avoid potential conflicts of interest.

As can be seen in its Sample Contract, Fee Disclosure Statement, and Form ADV, KISC is fee compensated by the Plan based on quarter end assets. This approach eliminates any Conflicts of Interest.

Adviser compensation can be paid in many ways. To highlight a few:

1. Explicitly by the Plan Sponsor – i.e., a flat retainer, hourly charges, or a price for each service, etc.
2. Implicitly by Fund Revenue Sharing, or generally undisclosed payments from funds as a reward for directing assets to them, etc.
3. Implicitly through arrangements with plan vendors, or through participant access (selling participants directly other products such as annuities, or specialty insurance like Long Term Care)
4. Explicitly or Implicitly through commissions based on Plan level or individual financial transactions.

KISC receives no other compensation other than explicitly described – no commissions, no referral fees, no rebates, no revenue sharing.

An insurance agent who acts as a fiduciary to a retirement plan may have a conflict of interest due to their role as an insurance agent. Insurance agents typically earn commissions or other compensation based on the products they sell, such as insurance policies or annuities. This compensation structure can create a potential conflict of interest when the agent acts as a fiduciary to a retirement plan.

As a fiduciary, the agent has a legal duty to act in the best interests of the retirement plan participants and beneficiaries. This duty includes making decisions that are solely in the interest of the plan, avoiding conflicts of interest, and acting with prudence and loyalty.

However, the insurance agent may be incentivized to recommend insurance products or annuities that may not be in the best interests of the retirement plan participants but may generate higher commissions or other compensation for the agent. This can result in the agent making decisions that are not solely in the best interests of the retirement plan participants, which is a violation of their fiduciary duty.

Additionally, insurance products and annuities may have higher fees and expenses than other investment options, which can negatively impact the retirement savings of plan participants.

For these reasons, it is generally recommended that insurance agents do not act as fiduciaries to retirement plans to avoid potential conflicts of interest. Instead, retirement plans should work with independent and unbiased fiduciaries who have no financial interest in the investments or products recommended to the plan participants.