This is a second in a series about the DOL’s March webinar on Fiduciary Responsibility.   Last week I wrote about the difference between business and fiduciary decisions.   This week it is on Fiduciary Monitoring/Oversight Responsibilities.

A fiduciaries responsibilities do not stop when they hire a third-party or another fiduciary.  You must monitor their activities.  In the webinar, the DOL stressed this as one of the most important aspects of a fiduciaries responsibilities.  After a plan fiduciary has selected a plan service provider, they must periodically monitor them to make sure the services are being delivered as agreed.   This includes fiduciaries (co-fiduciaries) such as investment ERISA Section 3(21) and 3(38).  You do not have to double check to make sure on their investment selections, but you do have to make sure they are adhering to the contract as well as the investment choices and/or recommendations adhere to the investment policy statement.  Same holds true with a fiduciary Plan Administrator, you cannot just hire and forget. 

Another key component of monitoring is to pay attention to any participant complaints the service providers receive.  This is often the first true indication that you are having issues with your service providers.  It is often on of the first things a DOL examiner will look at when your plan is examined. 

Per the DOL webinar, “An employer should also establish and follow a formal review process at reasonable intervals to decide if it wants to continue using the current service providers or look for replacements. Remember, here, the plan fiduciary may be liable if the service provider fails to carry out its responsibilities.”

Whether a Plan Sponsor hires a fiduciary to help in the administration of the plan or a non-fiduciary, the plan fiduciaries retain their fiduciary duty and must oversee the activities of the third-parties.

Next in the Series- Consequences of a Breach of Fiduciary Duty