Acting in a fiduciary role can help you elevate your retirement plan practice and provide higher touch service to sponsors. Understanding the different types of fiduciaries, advantages of becoming one and tools available to address fiduciary responsibilities is key for advisors looking to expand their services — and grow their book.
3(21) vs. 3(38) Fiduciaries
Not all fiduciaries share the same duties and responsibilities. Whether you serve as a 3(21) or 3(38) fiduciary determines how much control — and liability — you have over your clients’ plans. A 3(21) fiduciary provides investment advice but doesn’t have direct control over investments. An advisor acting as a 3(21) fiduciary, or co-fiduciary, has a duty to provide unbiased, prudent recommendations regarding fund selection and monitors investment performance. Ultimately, however, the advice can be accepted or rejected by the plan sponsor.
By contrast, 3(38) fiduciaries — also called named fiduciaries — can make decisions on behalf of clients and directly manage investments. Both 3(21) and 3(38) fiduciaries are legally and ethically charged with acting in the best interest of the plan, its participants and beneficiaries. But what are the professional advantages of taking on this increased level of responsibility — and risk?
- Differentiate yourself. The retirement plan space is a crowded one — and advisors need to find ways to set themselves apart. You may find a niche within an industry or with certain types of plans, but offering your services as a fiduciary is one of the most effective ways of gaining a competitive advantage and helping you stand out from the crowd.
- Provide greater value. You can help plan sponsors save time and reduce fiduciary risk. A 3(38) arrangement, in particular, can help companies spend less time researching funds — and in committee meetings discussing investment options and decisions.
- Opportunity to onboard more plans. Small and large plans may seek out a fiduciary for entirely different reasons. But no matter why a given plan sponsor wants to enlist a 3(21) or 3(38) fiduciary, you’ll be able to prospect from a larger pool of potential clients. Ability to charge higher fees. Increased fiduciary risk and responsibilities can justify higher advisory fees as well as increase revenue for you — and your firm. Prism365 compares fee ranges for 15 advisory services across 5 key performance areas — including fiduciary services. The report tells you not only whether fees are low, average or high, but also the percentage of advisors who offer these services and how they charge for them.
Make PlanFees Part of Your Fiduciary Toolkit
PlanFees can help you provide a higher level of service and greater insight into your clients’ fees. With three unique benchmarking platforms, you can choose the right tool for each situation.
In addition to our advisory benchmark, we offer Prism Total Fees Benchmarking. With it, you can perform a quick, two-minute fee checkup whenever the situation warrants and offer insights into whether a plan’s administrative, recordkeeping, investment and advisory fees are low, average or high compared to similar plans.
And with our latest tool, RFP Express, you can receive actual quotes from top providers within 24 hours. RFP Express allows you to provide accurate, actionable information to clients, without the time and resources required to procure a full live-bid benchmark.
Expand Your Service … And Your Practice
Provide a higher level of service by becoming a 3(21) or 3(38) fiduciary. With PlanFees’ suite of innovative benchmarking tools, you can lighten your clients’ workload, reduce their fiduciary risk, elevate your professional practice and build your book of business.
Benchmark better with PlanFees.
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