Quick, who’s the fiduciary of your company’s 401(k) plan?

If you don’t know chances are high that it’s you, the business owner.

If your next thought was “What exact exactly is a fiduciary?” your problems might run deeper still.

A fiduciary is someone who takes responsibility for a retirement plan, such as a 401(k) or 403(b) at a business. If you assume that role, and millions of small business owners do so, then it’s up to you to educate your plan members on how to invest successfully.

A staggering number of untrained people from all walks of life are fiduciaries, as 401k Specialist reports. Yet, for the most part, they have no clue what the job entails.

That can open you up to lawsuits, even years later. If you’re a business owner it’s important to understand who exactly owns the fiduciary role — you or your financial advisor — and plan accordingly.

I highly recommend you read this eye-opening reporting from John Sullivan at 401k Specialist and to contact Rebalance if you believe that you may be one of these many unwitting fiduciaries.

There are ways to reduce your personal exposure and improve investment outcomes and actually save money doing it.


‘Lay Fiduciaries’ Are Managing Retirement Plans and It’s a Problem

Most have not received formal fiduciary training

By John Sullivan

There are 17.5 million men and women who have the legal responsibility for managing the assets of pension plans, foundations, endowments, health and welfare plans, and personal trusts.

These “lay fiduciaries” generally come from outside the financial services industry, usually don’t get paid for their “fiduciary jobs” and have little, if any, training on what the law requires of them in managing more than $26.6 trillion of investments, according to the Center for Board Certified Fiduciaries (CBCF).

CBCF has completed its first, of what it says will become an annual, survey on lay fiduciaries and the different pools of assets they manage.

“Although lay fiduciaries have extraordinary control over many of our investments, they tend to be underappreciated by both themselves and their beneficiaries,” Allan Henriques, who led the research and analysis team, said in a statement. “This analysis is the first step in helping increase awareness and respect for the scope of their powerful impact.”

Key Findings include

  • The total number of lay fiduciaries is at least 17.5 million.
  • They manage more than $26.6 trillion.
  • Many don’t fully understand their responsibilities and the associated legal liabilities.
  • Most have not received formal fiduciary training. In fact, no government agency or regulator has responsibility for training the 17.5 million lay fiduciariesThis is where the Center for Board Certified Fiduciaries can play a crucial role.
  • Nearly all lay fiduciaries are concerned about the marked increase in fiduciary litigation.

Of the different pools of assets

  • Retirement plans: There are nearly 3 million lay fiduciaries who are managing roughly $20 trillion.
  • Foundations/endowments: There are nearly 13 million lay fiduciaries who are managing an estimated $6 trillion.
  • Health and Welfare plans: An estimated 181,716 lay fiduciaries who manage $240 billion.
  • Private trusts: An estimated 1,620,097 lay fiduciaries (10% of the total group) who have oversight for more than $172 billion.

In conducting the research, CBCF analyzed data from the Internal Revenue Service, Federal Reserve, U.S. Department of Labor, and numerous private-sector publications.

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