Plan sponsors spend a lot of time worrying about the market. Is it too high? Too low? Are we heading into a recession? Should we swap out funds before the next downturn? It’s a natural instinct—but it’s also the wrong place to focus your fear.
Markets go up and down. That’s not a fiduciary failure. That’s Tuesday.
What actually gets plan sponsors in trouble isn’t performance—it’s process. Or more accurately, the lack of one.
No one gets sued because a target date fund had a bad year. They get sued because there was no documented reason it was selected in the first place. No benchmarking. No monitoring. No discussion in committee minutes. Just a lineup that “looked fine” until it didn’t.
That’s the difference. Fiduciary responsibility isn’t about predicting outcomes. It’s about demonstrating a prudent process.
Did you review your investment options regularly? Did you benchmark fees against comparable plans? Did you document why you kept—or replaced—a fund? Did your committee actually meet, or just exist on paper?
If the answer to those questions is fuzzy, that’s your real risk—not whether the S&P 500 drops 15%.
The irony is that sponsors chase performance like it’s the scoreboard, when regulators and courts are looking at the playbook. They want to see discipline. Consistency. Evidence that decisions were made thoughtfully, not reactively.
A bad process during a good market is still a bad process. You just don’t notice it until the tide goes out.
So stop trying to outguess the market. You won’t win that game.
Instead, build a process you can defend in a conference room, in an audit, or in a courtroom. Because when things go wrong—and eventually they will—it’s not your returns that matter.
It’s your receipts.
