Some New Year’s resolutions are perpetual: lose weight, exercise more, spend more time with family and friends, become a better plan Fiduciary. These seasonal resolutions may have gotten away from you last year, or perhaps your achieved your goals for 2013 and are ready to raise your target (e.g., 5lbs. was cake and now you’re going for 10!). In either case, while we can’t help you with your weight, we can help you become a better retirement plan fiduciary.
To get fiduciaries started down the right path in the New Year, we are providing our Top Five New Year’s resolutions that retirement plan fiduciaries should consider making for 2014:
5. Adopt, review, and if necessary revise, your plan’s investment policy statement. An investment policy statement (“IPS”) should be established to set forth guidelines and procedures for selecting, monitoring, and removing investments and managers.
4. Hold regular plan fiduciary/committee meetings. Plan fiduciaries should meet periodically (we generally recommend at least annually) to consider information regarding performance, selection, and oversight of plan investments, investment managers, service providers, and other plan administrative matters. Minutes of the meetings should be kept to help demonstrate that the fiduciaries have engaged in a prudent process of analyzing and assessing relevant issues.
3. Conduct a compliance review of your plan documents. Since fiduciaries should make decisions by following the applicable plan documents (e.g., plan, summary plan descriptions, investment policy, trust, committee charters, delegations, etc.), fiduciaries should make sure plan documents are consistent with each other and with actual practice.
2. Review and monitor plan expenses and fees. Fiduciaries should ensure that all required fee disclosures are made timely and monitor fees on a regular basis. Fiduciaries should establish a policy for ongoing plan expense and fee monitoring and benchmarking all vendors: recordkeepers, investment providers, TPAs, and advisers. Also, as necessary, disclose plan fees to participants.
And the number one New Year’s Resolution that we suggest retirement plan fiduciaries take in 2014 is…
1. Practice procedural prudence. As a general matter, being a good fiduciary is all about having a procedurally prudent process. For each fiduciary decision you should: inquire, analyze, consider alternatives, get help and advice if needed, and document the process, actions and basis for the decision. Completing the tasks on this list will help establish and demonstrate procedural prudence.
We would appreciate the opportunity to share with you how Heffernan Financial Services helps our clients with addressing their Fiduciary duty. For more information on Heffernan Financial Services, please visit our website at www.heffgroupfs.com.