Investment providers, including insurance companies, fund companies, banks and brokerage firms, frequently muddy the water when it comes to defining the role “fiduciary.” In fact, there are a variety of fiduciaries in qualified retirement plans. In the area of investments, however, there are two distinct types of fiduciary advisors – ERISA 3 (21) advisors and ERISA 3 (38) advisors.

A 3 (21) advisor makes recommendations for the Plan administration and investments, whereas a 3 (38) advisor makes decisions, assumes investment discretion, and therefore the liability, for managing the plan’s assets. There is a significant difference between these two designations – the 3 (21) advisor makes only suggestions and recommendations, whereas a 3 (38) advisor makes decisions and is held accountable for the Plan investment management.

Bottom line – If your company wants to retain the responsibility for investment selection and monitoring, a 3 (21) investment advisor can assist in fulfilling your fiduciary responsibilities. However, if you prefer to assign investment responsibility to an outside advisor and be protected from fiduciary liability for investment selection and monitoring, a 3 (38) investment manager should be considered.

Many providers in the 401(k) industry act neither in a 3 (21) nor a 3 (38) advisor capacity. That means the liability for selecting investments, monitoring performance, deciding when and what changes to make and communicating those changes to plan participants, rests squarely on your company’s shoulders. Even if a provider gives you a list of preferred or recommended funds, the decision-making liability still rests with you. Very rarely is an advisor willing to assume the liability for both monitoring the plan and managing the plan’s assets – accepting the role of 3 (38) advisor.

As a professional, corporate fiduciary, Counsel Trust can act as either the 3 (21) or 3 (38) advisor of your employee retirement plan. We accept these roles in writing, assuring your plan’s trustees a critical measure of liability protection.

As a fiduciary, we shine a bright light on all Plan fees and costs. Unlike most 401 (k) providers, Counsel Trust does not participate in fee sharing arrangements with mutual fund companies or other service providers, thus completely avoiding conflicts of interest and maintaining strict impartiality. That means you will never need to use a matrix, grid, disclosure questionnaire or other “magic decoder” before you can determine what your real costs are. And, you will never have to ask the “right question” in the “right way” before you can feel confident you are getting full disclosure.

With the Counsel Trust’s employee retirement plans, you will know what your true costs are, for every aspect of your program, all the time. Last, as Plan sponsor, you will have the flexibility to choose how Plan fees are paid – whether they are charged to the Plan or paid by the company.