Fiduciary Duties

The primary duty of a fiduciary is to manage the investment process and practices that support an investment plan.  A common theme throughout ERISA is procedural prudence, which is the process fiduciaries use with the goal of making sure their decisions are in the best interest of the plan participants and beneficiaries. 

Duties include:

“Duty of Loyalty”
  • Act solely in the interest of the plan participants and beneficiaries
“Exclusive Benefit Rule”
  • Hold and deal with plan assets for the exclusive purpose of providing plan benefits and defraying reasonable expenses of administering the plan
“Prudent Person Rule”
  • Act with the care, prudence, skill and diligence that a prudent person acting in like capacity under similar circumstances would act
A fiduciary also must:
  • Diversify the plan’s investments unless it is clearly imprudent to do so.
  • Act in accordance with the plan document.
  • Monitor the investments.
In the end, fiduciaries must be able to show that they properly investigated and documented each plan fiduciary decision.  The process is as important as the results.  The process must be supported by the records kept to document the steps taken in the performance of fiduciary duties.

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