Fiduciary Services
ERISA 3(21) Fiduciary Advisor and 3(38) Investment Manager
Our Group is among a limited number of LPL Financial advisors approved to engage as both an ERISA 3(21) fiduciary advisor and a 3(38) investment manager. These fiduciary statutes require that the advisor's interests must always be aligned with the interests of the plan and its participants.
What is a 3(21) Fiduciary Advisor?
Any individual can be a fiduciary under section 3(21) if they exercises any authority or control over the management of the plan or the management or disposition of its assets; if he/she renders investment advice for a fee; if he/she has any discretionary responsibility in the administration of the plan, or is named in the plan documents.
When a plan sponsor adopts the advisor’s recommendations, the plan sponsor retains all of the fiduciary responsibility and liability of the decisions.
What is a 3(38) Investment Manager?
Section 3(38) defines an Investment Manager as a fiduciary due to their responsibility to manage the plans assets. ERISA provides that a plan sponsor can delegate the significant responsibility (and significant liability) of selecting, monitoring and replacing of investments to the 3(38) investment manager fiduciary.
A 3(38) fiduciary can only be (a) a bank, (b) an insurance company, or (c) a registered investment adviser (RIA) subject to the Investment Advisers Act of 1940. The plan sponsor signs over authority to the 3(38) fiduciary to make all investment decision; the 3(38) fiduciary assumes legal responsibility and liability for the decisions it makes.