So what exactly is a 3(38) Fiduciary, a 3(21) Fiduciary, and more importantly, why are they important to me, the plan, and the plan participants?

A 3(38) Fiduciary by definition under ERISA is an investment manager with a special type of fiduciary duty, and one who has been specifically appointed to have full discretionary authority and control to make the 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 Adviser (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 Managers decisions. Working with Reilly Financial Advisors as a 3(38) Fiduciary allows you to truly feel comfortable that the best investments are being provided to plan participants. We are an independent consultant and Registered Investment Advisor provide true fee transparency and disclosure, allowing you to provide an open architecture platform of best in class investment options for your plan.

Conversely, a 3(21) Fiduciary is a person or entity who has discretionary over the plan, and can be the plan sponsor, trustee, plan 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 lye on the plan sponsor, trustees, and any other party responsible for the management of the plan.

With RFA acting as a 3(21) Fiduciary, we are able to assist in fund selection decisions, however as the plan sponsor, you have the ability to reject any of the recommendations made. RFA and the plan sponsor jointly share the fiduciary responsibility in regards to the investments within the plan.

Whether you choose to engage RFA as a 3(38) or a 3(21) Fiduciary, you can feel comfortable knowing that we will work diligently to provide the applicable Fiduciary support and services that are aimed at helping your plan participants chart a path to successful financial futures.