Reilly Financial Advisors is both a 3(38) fiduciary and a 3(21) fiduciary. We’ll tell you what that means and—more importantly—why it’s important to you, your plan, and your plan participants.
A 3(38) fiduciary, by definition under the Employee Retirement Income Security Act (ERISA), is an investment manager with a special type of fiduciary duty who has been specifically appointed to have full discretionary authority and control to make actual investment decisions.
This type of fiduciary may select, monitor, remove, and replace the investment options offered under the plan and can only be a registered investment advisor (RIA), a bank, or an insurance company. Additionally, 3(38) fiduciaries must acknowledge their fiduciary status in writing.
By prudently selecting and working with a 3(38) investment manager, the plan sponsor and other plan fiduciaries are relieved of the responsibility of the investment manager’s decisions. This means that working with Reilly Financial Advisors as a 3(38) fiduciary allows you rest easy knowing we are overseeing the investment options provided to plan participants. We are not only an independent consultant and registered investment advisor but we provide true fee transparency and disclosure, allowing you to provide an open architecture platform of high-quality investment options for your plan.
A 3(21) fiduciary is a person or entity who has discretion over the plan and can be the plan sponsor, trustee, administrator, and investment fiduciary.
When RFA, as a registered investment advisor, takes 3(21) fiduciary duty, we are able to suggest fund lineups and allocations to the plan; however, the end decisions fall to the plan sponsor, trustee(s), or any other party responsible for management of the plan.
In other words, while we assist in fund selection decisions, the plan sponsor has the ability to reject any of the recommendations made (we share fiduciary responsibility jointly with the plan sponsor in regard to the investments within the plan).
Whether you choose to engage RFA as a 3(38) or 3(21) fiduciary, you can feel comfortable knowing we will work diligently to provide the applicable fiduciary support and services aimed at helping your plan participants chart a path to successful financial futures.