Who Does What?

 

 
Non-Fiduciary
Broker
3(21) Investment Advisor
3(38) Investment Advisor
Advisor
Responsibilities

Advises sponsor by making investment recommendations and providing related assistance. To avoid fiduciary status, advice generally must not serve as primary basis for sponsor's decision. Advises sponsor by making investment recommendations
and assists sponsor
in monitoring and replacing investments, as necessary.
Advisor has discre- tion to make all investment decisions, including fund selection, monitoring and replacement without plan sponsor approval.
Plan Sponsor
Responsibilities
Takes into considera- tion advisor recom- mendations but makes final decision on any plan changes. Sponsor should independently evaluate advice from advisor, who is not a fiduciary. Takes in to considera- tion advisor recom- mendations but makes final decision on any plan changes. Sponsor may rely on advice from advisor who is a co-fiduciary. Responsible for prudently selecting a qualified 3(38) manager, then monitoring and replacing manager as necessary.

Considerations


Services are typically provided without written agreement.

Recommendations from advisor to client must meet suitability standards under security laws.

No fiduciary liability under ERISA as long as advisor does not provide fiduciary “investment advice”.

Service agreement defines advisor's role.

Education ensures sponsor understands they have final say.

 

Service agreement clearly spells out scope of advisor's management responsibilities.

Advisor needs experienced investment team to
make investment decisions.

Additional fiduciary insurance required.

 

 

 

 

 

Unless otherwise exempted by law, this website, our investment advisory and securities transactional services are only for residents of AZ, CA, CT, FL, IA, MN, NV, NY, OR, TX, WA, and WI. Stiles Financial Services, Inc. is a Registered Investment Adviser. Advisory services offered through Cambridge Investment Research Advisors, a Registered Investment Adviser. Securities offered through Cambridge Investment Research, Inc., Member FINRA & SIPC. Cambridge & Stiles Financial Services, Inc. are not affiliated.