Overview

PIA specializes in showing sponsors of 401(k) and other retirement plans how a longstanding, yet little-known, legal mechanism in ERISA allows them to get rid of significant fiduciary responsibilities – and therefore significant liabilities – for the selection, monitoring and replacement of plan investment options and then transfer such responsibilities and liabilities to PIA. Any plan sponsor that does this will escape liability for PIA’s decisions and actions concerning these critical responsibilities.

Our firm is totally independent of all plan vendors and its fully disclosed revenue comes only from its clients, thereby helping to avoid conflicts of interest.

PIA believes it important to establish and follow a prudent investment and management process that is legally sound, academically oriented and cost efficient. Disciplined adherence to this process can help reduce the risk and enhance the future wealth of any pool of money, long term, whether it is a 401(k) retirement plan, non-profit foundation or endowment, or private family trust.

PIA’s investment advisory agreement with each plan sponsor describes the specific duties that our firm is retained to perform and those it won’t perform. We meet with each plan sponsor client annually to review the plan and ensure that we have carried out our designated duties.

We are experts that specialize in providing truly valuable services to retirement plans.

Our Firm

Gary K. Allen, Jeffrey B. Coontz and W. Scott Simon are the principals and senior management of PIA. They have in aggregate more than fifty years of experience in the retirement plan industry. Their firm, a SEC registered investment advisor, specializes in showing sponsors of 401(k) and other retirement plans how a longstanding, yet little-known, legal mechanism in ERISA allows them to get rid of significant fiduciary responsibilities and liabilities for the selection, monitoring and replacement of plan investment options by transferring such responsibilities and liabilities to PIA. Any plan sponsor that makes this transfer will escape liability for PIA’s decisions and actions concerning these critical responsibilities.

PIA operates on a fee-only basis and accepts no compensation from any third party plan vendors, thereby assuring its complete independence from them. Its fully disclosed revenue comes only from its clients, which helps to avoid conflicts of interest.

PIA believes it important to establish and follow a prudent investment and management process that is legally sound, academically oriented and cost efficient. Disciplined adherence to this process can help reduce the risk and enhance the future wealth of any pool of money, invested long term, whether it is a 401(k) retirement plan, non-profit foundation or endowment, or private family trust.

PIA’s plan sponsor-friendly investment advisory agreement with each sponsor describes clearly the specific duties the firm is retained to perform and those it won’t perform. PIA’s representatives meet annually with each plan sponsor client to review the plan and ensure that the firm has carried out its designated duties prudently.

Our Difference

The following are the minimum standards the sponsor of a retirement plan should require in selecting the plan’s investment advisor. These standards provide a sponsor with a framework for detecting the difference between the great majority of advisors that merely sell products and actual experts that specialize in providing truly valuable services to retirement plans.

Independence from Outside Third Parties
The investment advisor to a retirement plan should be free from any real (or perceived) conflicts of interest. The advisor should have no allegiance to any entity except its client which is the plan sponsor and, by implication, the plan’s participants (and their beneficiaries).

PIA is an independent advisory firm and does not accept any compensation from third parties, thereby avoiding conflicts of interest and assuring its complete independence.

Fiduciary Protection
The sponsor of a retirement plan is always a fiduciary. A sponsor can get rid of significant fiduciary responsibilities and liabilities for the selection, monitoring and replacement of plan investment options by transferring them to an investment advisor that will accept sole responsibility and liability for such duties via written contract in accordance with ERISA sections 3(38) and 405(d)(1).

PIA operates as an ERISA section 3(38) investment manager and a 405(d)(1) independent fiduciary and, as such, accepts the transfer of fiduciary responsibilities and liabilities from its plan sponsor clients.

Prudent Investments
The advisor to a plan should provide a legally sound, academically oriented and cost efficient prudent investment process that’s designed to protect plan participants (and their beneficiaries) – as well as plan sponsors.

PIA has a prudent investment process that is documented in its proprietary Investment Policy Statement.

Great Service
The advisor to a plan should provide great service. But that’s not enough. Provision of those services should be enforced by an investment advisory agreement.

PIA enters into a legally binding investment advisory agreement with each client that acknowledges the firm’s delegated responsibilities in a clear and concise way. PIA’s performance of these duties is reviewed on an annual basis with its plan sponsor clients.

Proper Advice
The plan sponsor is responsible for all advice associated with its retirement plan. A plan investment advisor should provide advice only at the plan level (i.e., ERISA section 3(38)), not at the participant level, in order to help protect the plan sponsor from liability. Any advice given at the participant level should only be done through the provisions of the Pension Protection Act or under a level fee arrangement.

PIA is experienced thoroughly in the correct way to provide advice to a retirement plan. The firm has procedures in place to eliminate any unnecessary risks a plan sponsor might be exposed to through imprudent advice.

Excellent Education
The advisor to a plan should provide a customized investment education program to plan participants in accordance with Interpretive Bulletin 96-1; Participant Investment Education; Final Rule, issued by the Department of Labor.

PIA measures the success of its education program by focusing on the investment behavior of plan participants. The firm educates a plan sponsor’s administrative staff to limit any potential problems raised by the difference between “education” and “advice” as described in Interpretive Bulletin 96-1.

Reliable Expertise
The investment advisor to a plan should have “book smarts.” The education, training and credentials of the advisor should have earned it respect in the retirement plan community. An advisor should be able to articulate and demonstrate how its expertise is a benefit to a plan sponsor and each plan participant (and their beneficiaries).

PIA has a team of highly educated experts that continues to learn and broaden its expertise through continuing education, and attendance and participation at various retirement plan conferences and events around the country.

Broad Experience
The advisor to a retirement plan should have consulted with many businesses and organizations over the course of many years in the area of qualified retirement plans. Too often, investment advisors are distracted by the allure of selling additional products and services to plan participants. These activities are a nuisance at best and, at worst, may create conflicts of interest for the plan sponsor and investment advisor.

PIA employs a team of highly experienced retirement plan professionals that have decades of combined practical experience working with clients on a daily basis. The average consultant at the firm has fifteen years of experience. PIA focuses on providing real solutions based on the best interests of plan participants (and their beneficiaries), as well as those of the plan sponsor.

ERISA holds plan sponsors to the highest standards of being a prudent investment expert – even though they are almost never investment experts.

There is a solution to this conundrum.

 

 

 

 

What Every Plan Sponsor Should Know

What every sponsor of a retirement plan should know is that ERISA holds them to the highest standards of being a prudent investment expert – even though they are almost never investment experts. There is a solution to this conundrum.

The Solution
The Employee Retirement Income Security Act (ERISA), the body of law that governs qualified retirement plans such as 401(k) plans, has a mechanism by which a plan sponsor can get rid of its responsibilities and liabilities for the selection, monitoring and replacement of plan investment options.

The sponsor can do this by retaining an investment advisor that accepts transfer of these responsibilities and liabilities from the sponsor. This is done through a written contract between the sponsor and advisor in which the advisor is legally bound as an ERISA section 3(38) investment manager. By signing this contract, the advisor becomes an ERISA section 405(d)(1) independent fiduciary to the plan which makes it solely responsible and liable for its investment decisions concerning the selection, monitoring and replacement of plan investment options. A plan sponsor, however, always retains the duty to select, monitor and replace the investment manager.

Few Advisors Are Willing to be Fiduciaries
Few advisors to retirement plans will accept transfer of such significant fiduciary responsibilities and liabilities. The great majority of advisors offer plan sponsors only “help” or “assistance” in carrying out the sponsors’ investment-related fiduciary duties. This help is comprised of monitoring services, facilitations of manager searches, checklists and other kinds of busywork. None of these services do anything to help plan sponsors rid themselves of the significant responsibilities and liabilities they bear under ERISA.

The “Co-Fiduciary” Advisor – Buyer Beware
Some sponsors of ERISA-governed retirement plans have become aware that the advisors to their plans should wear the “fiduciary” label. The retirement plan industry has responded to this by creating a marketing gimmick, otherwise known as a co-fiduciary. The term “co-fiduciary” has been hijacked by many in the industry so that they can turn non-fiduciary broker-advisors to retirement plans into fiduciaries. This invented co-fiduciary marketing term has nothing to do with the legal meaning of a co-fiduciary under ERISA law.

An advisor wearing the “co-fiduciary” label accepts no transfer of responsibilities, so there is no mitigation of liabilities for the plan sponsor. Such advisors simply refuse to accept from plan sponsors the transfer of significant responsibilities and liabilities for the selection, monitoring and replacement of plan investment options. This failure leaves plan sponsors holding the bag all alone and bearing all fiduciary responsibilities and liabilities with no offer of real help from Wall Street non-fiduciary broker-advisors that wear the “co-fiduciary” label.

There is a Clear Choice
Sponsors of retirement plans have a clear choice. Retain an investment advisor that’s an ERISA section 3(38) investment manager and transfer significant fiduciary responsibilities and liabilities to that qualified advisor. Sponsors that do this are then no longer liable for selecting, monitoring and replacing plan investment options. The other choices are to retain a plan investment advisor that’s an ERISA section 3(21) “co-fiduciary” and receive no relief from fiduciary responsibilities and liabilities for selecting, monitoring and replacing plan investment options or retain a non-fiduciary advisor and receive no relief from any fiduciary responsibilities and liabilities at all.

This choice is an obvious and easy one when plan sponsors are informed fully about it.

adobe_pdf_file_icon_32x32 Sponsors of Retirement Plans Can Legally Transfer Significant Risk to an ERISA 3(38) Investment Manager