On the role and responsibilities of a fiduciary

2016 has been a thought-provoking year for the word fiduciary. In April, the Department of Labor finalized the rule to address conflicts of interest in retirement advice. In June, John Oliver had a segment on retirement plans where he provided five tips for retirement plan participants with one being, "ask if your adviser is a fiduciary." What does this mean? It means "Fiduciary" and "Fiduciary Meaning" have never been researched more in the past 10 years than in 2016 according to Google Trends. To help explain who is a fiduciary, here is the exact explanation as described on the Department of Labor's website section on Meeting Your Fiduciary Responsibilities: "Many of the actions involved in operating a plan make the person or entity performing them a fiduciary. Using discretion in administering and managing a plan or controlling the plan's assets makes that person a fiduciary to the extent of that discretion or control. Thus, fiduciary status is based on the functions performed for the plan, not just a person's title. A plan must have at least one fiduciary (a person or entity) named in the written plan, or through a process described in the plan, as having control over the plan's operation. The named fiduciary can be identified by office or by name. For some plans, it may be an administrative committee or a company's board of directors. A plan's fiduciaries will ordinarily include the trustee, investment advisers, all individuals exercising discretion in the administration of the plan, all members of a plan's administrative committee (if it has such a committee), and those who select committee officials. Attorneys, accountants, and actuaries generally are not fiduciaries when acting solely in their professional capacities. The key to determining whether an individual or an entity is a fiduciary is whether they are exercising discretion or control over the plan. A number of decisions are not fiduciary actions but rather are business decisions made by the employer. For example, the decisions to establish a plan, to determine the benefit package, to include certain features in a plan, to amend a plan, and to terminate a plan are business decisions not governed by ERISA. When making these decisions, an employer is acting on behalf of its business, not the plan, and, therefore, is not a fiduciary. However, when an employer (or someone hired by the employer) takes steps to implement these decisions, that person is acting on behalf of the plan and, in carrying out these actions, may be a fiduciary." Now that you know who is considered a fiduciary, here are the responsibilities associated with being a fiduciary: - Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them - Carrying out your duties prudently - Following the plan documents - Diversifying plan investments - Paying only reasonable plan expenses - Being a fiduciary is an important responsibility; please give me a call to talk further about your fiduciary role as well as a helpful fiduciary checklist. ----- David P. Angeline, is an Assistant Vice President, 401K Specialist, at Karpus Investment Management, a local independent, registered investment advisor managing assets for individuals, corporations, non-profits and trustees. Offices are located at 183 Sully's Trail, Pittsford. Call 585-586-4680. Published: Wed, Aug 24, 2016