Advertising is a great medium and it’s a medium that could often be confusing to the consumer. So when it comes to the retirement plan business, you have providers providing fiduciary services whether that’s 3(16), 3(21), 3(38), co-fiduciary, or the generic fiduciary services. Of course, let’s not forget that fiduciary warranty, that is neither a fiduciary nor a wide-ranging warranty.
So while providers are advertising these level of services, most plan sponsors are really unaware of what all of this means and I’m sure that there may be providers that may advertise a specific service like a 3(38) without the specific 3(38) discretionary role that comes with it. There may be 3(16) administrators that don’t sign Form 5500.
So while people concentrate on numbers and names, plan sponsors should focus more on what these providers are promising in their contracts. Kosher style isn’t kosher and a 3(16), 3(21), or 3(38) service without the requisite duties and liabilities that come with it isn’t the service they claim. So a plan sponsor should review what types of service are being promised by actually reading the contracts. If they can’t make heads or tails, then hire an ERISA attorney who can.
There is nothing worse in buying a service that really isn’t what it says it is.