ERISA section 3(38) Plan Level Discretionary Investment Mgmt.


Discretionary Investment Management Under
ERISA section 3(38)


Investment selection and monitoring is highly labor-intensive and time-consuming—and it’s where most fiduciary breaches are identified.  Saving for retirement isn’t to dissimilar to running your business. The better you control your expenses the more profitable you’ll be.  As little as a 2% improvement from a combination of reduced fees and improved performance can add almost 66% more value to an investors 401(k) account over 25 years.

How much do you really know about your plan’s fees?  Put your investment menu to the test.  CLICK HERE

Fees can often be reduced by as much as 50% and sometimes more. They may include mutual fund management fees, 12(b)-1 fees, shareholder-servicing fees, sub-TA fees, mutual fund sales charges (sales load, CDSC, etc.), wrap fees, mortality & expense fees, investment management fees, transaction fees, or any other fee assessed to the participant’s 401(k) account.

Within the construct of our Fiduciary Service, included in our service fee, under ERISA section 3(38) we serve as the plan’s discretionary investment manager, responsible for…

  • evaluation, selection and fiduciary monitoring of investment funds;
  • preparation and delivery of investment related notices;
  • replacement of investment options as necessary and
  • the provision of 3 strategic asset allocation models that participants can choose from, either as a single investment strategy or as a foundation for building their own asset allocation.

Investment Selection Process
Our investment selection process is grounded in the principles of the Prudent Investor Rule, focusing on the three most relevant predictors of future performance.  What are the three most relevant predictors of future performance?  It’s one of the first questions a plan sponsor should ask a fiduciary to help establish their knowledge.

It’s uncomplicated. It’s vital. It’s about choice. It’s the best way to build the right investment menu.

Any one of the many available open architecture custodial platforms allows us to use our proprietary investment selection process with limited or no revenue-sharing.

Why avoid revenue-sharing? While many sponsors don’t realize it, these arrangements can lead to uneven distribution of plan expenses, where participants with larger account balances pay more than their fair share of plan costs. We’d be happy to explain just how that can happen.

Strategic Asset Allocation Models

In our capacity as the plan level 3(38) investment manager the plan is provided with 3 Strategic Asset Allocation model portfolios. This can help participants work toward their personal investment objectives, providing them with a prudently recognized foundation to successfully build their retirement nest egg.

A questionnaire is provided asking the participant to answer a series of questions designed to define their willingness to accept downside risk in search of upside return. This translates into a recommended asset class configuration. Each will offer a different level of equity exposure.


Participants can choose one portfolio as a single investment strategy or as a foundation for building their own asset allocation. Record-keeping technology will enable participants to automatically rebalance their account.

And for those participants who want someone to actively manage their account for them we offer My 401(k) Risk Manager.

Risks Ahead