Skip to main content

Fiduciary Responsibilities: ERISA Standards of Conduct


  • Act solely in the interest of plan participantsThis may seem obvious, but you cannot prioritize your board, president, or local community interests over the plan participants.

  • Act prudentlyThe duty to act prudently requires expertise in areas such as investment. Lacking that expertise, a fiduciary should hire someone with that professional knowledge. Fiduciaries are responsible for a decision process, not investment results. The process used to make decisions must be documented to show fiduciaries acted prudently. 

  • Capture more detail than you typically would when documenting an employee benefits-related decision as a fiduciary, . You do not just say, “The retirement plan committee reviewed the investment menu and the performance over the last six months and discussion ensued.” Instead, say something like, “There was a discussion about fund ABC, which almost but not quite met the watch list criteria that we set up in the investment policy statement and the committee decided to put the fund on the watch list. We’re going to review it in the next three months, particularly with an eye toward management turnover or style drift.” 

  • Follow the plan documentFor example, if your employer contributions are being directed by the plan sponsor and the employee contributions are being directed by the plan participants, the plan document must provide for that. 

  • Periodically review the plan document to ensure named fiduciaries are accurate and in compliance with regulatory changes—The best practice is to make sure you have an internal expert responsible for knowing the plan document intimately. The expert should ask the tough questions of your service provider and your payroll department. 

  • Pay only reasonable plan expensesFiduciaries can determine if plan expenses are reasonable with a documented process of comparing their plans to relevant benchmarks. A request for information resulting in competitive quotes is a definitive method to determine if fees are reasonable. 

  • Offer a diversified set of investment optionsPeople tend to think intuitively that more is better anytime people have to make a decision. However, studies show that as you add funds, utilization by plan participants actually decreases. When there are too many funds, people are likely to go into the default fund or defer making any decision on funds at all.


If you have any questions about fiduciary responsibilities or ERISA Standards of Conduct, or would like to begin talking to a retirement plan advisor, please get in touch by calling (800) 388-1963 or e-mail us at hbs@hanys.org.

Popular posts from this blog

Innovative employee retention strategies: 9 fresh ideas

Employee engagement and retention are pivotal in every sector, but they carry even more weight in the not-for-profit space, where resources are often limited. High turnover can be both costly and disruptive, impacting productivity and damaging morale. In an era of workforce evolution, to effectively retain their top talent, organizations must explore innovative employee retention strategies that go beyond conventional methods.  Engaged employees are distinguished by their higher productivity, motivation and loyalty, and they are more likely to stay with a company for the long term. Gallup recently updated its research article, The Benefits of Employee Engagement , finding that "low engagement teams typically endure turnover rates that are 18% to 43% higher than highly engaged teams."  In addition to turnover, disengaged employees negatively impact a company's financial health, with turnover costs averaging six to nine months of the departed employee's salary, accordin

Executive disability income protection program: C-suite FAQ

Implementing a comprehensive risk management strategy is imperative for C-level executives and senior management at HANYS member hospitals. One critical, but often overlooked component, is the executive disability income protection program. But what exactly is this program and why is it vital for high-income earners?   With increasing interest in executive disability income protection programs from C-suite executives, TruePlan Benefit and Retirement Advisors interviewed Bernard A. Gleeson, Director, Employee Benefit Services on Executive disability income protection programs FAQs.  What is an executive disability income protection program?  An executive disability income protection program (EDIPP) is a specialized form of disability insurance designed to supplement existing group disability plans offered by employers. These individual plans provide additional coverage beyond the typical monthly maximum benefit cap found in traditional employer-based offerings. By overlaying on top of g

Employer Q&A: What is Financial Wellness?

There is a significant gap between employees and employers regarding financial wellness programs, according to the Harvard Business Review . “80% of employees report being financially stressed. Only 28% of employers offer financial wellness programs,” the article states.   Similarly, Forbes highlights a 2023 Transamerican Institute study showing that 77% of workers consider financial wellness programs an important benefit.  With so much research on the need for these programs, what should employers do?  The first way employers can bridge this gap is to learn what financial wellness is and how it can improve an employee’s overall being. In this short Q&A, we introduce the topic and offer some essential tips to get started.  Q1: What is financial wellness?  A: Financial wellness refers to the sense of security a person feels about their financial situation in all aspects of their life. It means having control over day-to-day finances, being prepared for emergencies and having a plan