10 Essential Questions When Hiring a 3(38) Investment Fiduciary

Posted: Apr 23, 2020 3:57:41 PM

It’s important to assess a 3(38)’s experience. We have seen 3(38) fund recommendations that would not withstand scrutiny in an ERISA court. A fiduciary should be transparent about fees and how they make money. There is nothing legally wrong with receiving fees from mutual funds, but philosophically, whomever pays you, is who the advisor represents.  

Here are the most important questions you should be asking when considering a third-party plan fiduciary.

  1. What is your investment philosophy?
  2. How do you decide which funds to include in your investment lineup?
  3. What are your fees?
  4. What services are included in your fees and what are additional costs?
  5. Do you have any financial interest in or receive any incentives from the funds you recommend?
  6. How do you track success for your clients?
  7. Can you provide three references?
  8. What is your background and is there anything on your regulatory record that I should know about?
  9. How often will we interact in person, by phone or by email?
  10. Can you explain financial concepts to me and my staff?