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Providing Particpant Level Investment Advice

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Information about Providing Particpant Level Investment Advice
Finance

Published on March 5, 2014

Author: ChuckHammond

Source: slideshare.net

Description

Ultimately, we have concluded that a plan sponsor that properly authorizes the HCM 401(k) Optimizer incurs no additional liability under ERISA. In fact, participants that utilize the HCM 401(k) Optimizer computer model for asset allocation actually reduce the plan sponsor’s fiduciary liability for the participant’s investment results. This reduction in liability for participant investment
performance is conditioned on the HCM 401(k) Optimizer computer model meeting the statutory exemption provided under section 408(g) and the prudent selection and monitoring of the computer
model by the plan sponsor.4
If done properly, a plan sponsor cannot be held liable for the
investment decisions of both the plan participant and the investment advisor.5
In addition, the plan
sponsor has no duty to monitor the specific investment advice provided to any participant using the
HCM 401(k) Optimizer.6
This is a valuable reduction in fiduciary exposure to a plan sponsor.
Additionally, a plan sponsor will be providing a beneficial service to its participants while
establishing a strong defense to any claim the plan sponsor failed to provide sufficient assistance to
participants in choosing appropriate investments, given their tolerance for risk, to achieve their
retirement objectives.
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