The most vital role of a financial adviser in regards to working with a retirement plan is minimizing fiduciary liability. Moreover, the financial advisor minimizes the responsibility that a plan sponsor and the plan trustees have when handling the process of plan investments.

There are primarily three levels of fiduciary.

Non-fiduciary brokers place full weight onto the plan sponsor (organization) for financial advise and all fiduciary responsibility and liability.

Fiduciary 3(21) allows for the plan sponsor to share fiduciary responsibility and liability.

Fiduciary 3(38) accepts complete fiduciary responsibility and liability.

Participant education can be used as a tool to assist plan sponsors to minimize their liability under ERISA 404(c). One of the biggest assumptions made about the role of participant education is that it’s not required by law. However, under the regulations of the Department of Labor, fiduciaries must provide sufficient information to the participants in order for them to make informed decisions.


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