Why Every Retirement Plan Needs an Independent Professional Named Fiduciary

By Trevor Merrill, AIFA, BCF™

The Complexity of Managing Retirement Plans

As a business owner, your responsibilities are diverse and demanding. From managing employees to staying ahead of industry trends, your time is stretched thin. Amidst these pressures, the importance of an independent professional named fiduciary in your retirement plan often gets overlooked. However, this role is crucial, offering significant benefits in three key areas: time, expertise, and liability. By delving deeper into each aspect, we can understand why entrusting a fiduciary with the management of your retirement plan is not just a good idea, but a necessity.

Time: Your Most Valuable Resource

Time is an invaluable asset, especially for busy business owners. The administration of a retirement plan requires meticulous attention to detail, including selecting appropriate investments, monitoring their performance, and ensuring compliance with a myriad of regulations. These tasks are not only time-consuming but also require ongoing management. The burden of these responsibilities can detract from your ability to focus on core business activities, potentially impacting your overall productivity and success.

By appointing a fiduciary, you delegate these time-intensive tasks to a professional who specializes in them. This delegation allows you to redirect your time and energy toward growing your business and improving operations. The fiduciary takes on the intricate details of plan management, ensuring that all aspects are handled efficiently and in compliance with legal requirements.

Expertise: Navigating the Complexities of Retirement Planning

Retirement plans are complex financial vehicles, requiring a deep understanding of investment options, risk management, and regulatory frameworks. As a business owner, you may not possess the specialized knowledge needed to navigate these complexities. This gap in expertise can lead to suboptimal investment decisions, potentially jeopardizing the financial well-being of your employees and increasing your liability.

An independent professional named fiduciary brings a wealth of experience and knowledge to the table. They stay abreast of the latest industry trends, regulatory changes, and best practices in retirement plan management. With this expertise, they can provide tailored advice and strategies that align with the specific needs of your business and employees. Their guidance ensures that the retirement plan is not only compliant but also optimized for performance and cost-efficiency.

Liability: Shielding Your Business from Risk

One of the most critical, yet often underestimated, aspects of managing a retirement plan is the potential liability involved. Retirement plan sponsors are held to stringent fiduciary standards under laws such as the Employee Retirement Income Security Act (ERISA). These standards require that decisions regarding the plan are made in the best interests of the participants, with due diligence and prudence. Failure to adhere to these standards can result in significant legal consequences, including personal liability for business owners.

The risks are not limited to the business itself; they can extend to the individuals making fiduciary decisions. This concept, known as “piercing the corporate veil,” means that personal assets may be at risk if fiduciary duties are not fulfilled appropriately. By appointing an independent fiduciary, you can mitigate this risk. The fiduciary assumes a significant portion of the liability, ensuring that the plan complies with all relevant regulations and standards. This transfer of liability not only protects your business but also safeguards your personal assets.

Conclusion: Securing the Future of Your Employees’ Retirement

In today’s complex and highly regulated financial landscape, the role of an independent professional named fiduciary is indispensable. By entrusting a fiduciary with the management of your retirement plan, you gain a valuable partner who saves you time, provides expert guidance, and shields you from potential liabilities. This partnership allows you to focus on what you do best—running your business—while ensuring that your employees have a secure and well-managed retirement plan. Don’t leave the future of your employees’ retirement to chance. Consider bringing an independent professional named fiduciary on board today. Their expertise and commitment to acting in the best interests of plan participants will provide peace of mind and a stronger foundation for your company’s retirement benefits. Reach out to Fiduciary Wise and schedule a meeting with us today to relieve over 92% of your liability here.