Heather Bader Discusses Increased Need for Fiduciary Education on ERISA With PlanAdviser

Benefits and executive compensation partner Heather Bader spoke with PlanAdviser about the increased need for fiduciary education due to changes in guidance from the Department of Labor related to the Employee Retirement Income Security Act Sections 3(21) and 3(38). 

Bader explained that 3(21) fiduciaries need to provide advice and recommendations during committee meetings so that the plan sponsor can make final investment decisions. She also explained that 3(38) investment managers take on the fiduciary responsibility for investments, and while 3(38) managers are not asking committees to review investments, they still have a lot to discuss.

“[A 3(38) investment manager is] unilaterally deciding whether or not the investments are appropriate … so they have a much bigger stake,” Bader noted. “As a part of that, I saw a trend of education because they really want to make sure that the investment committee [members] were not just … getting these recommendations but understanding the landscape behind it.”

She emphasized that trainings and education have created an opportunity for committee members overseeing plans that utilize either 3(21) or 3(38) investment managers to discuss “what’s going on with the global markets, what’s going on from an economical perspective … so that these committee members are really understanding not just the investment, but — from an economic perspective — what the markets and trends are.”