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COLLECTED WISDOM™ for Investment Committees

Most would agree the plan fiduciaries must establish investment committees that will clearly define a process of plan administration. However, the only thing worse than not having an investment committee is having an investment committee that doesn't know what it's doing or never follows its own rules. Learn more from these resources.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

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Other topical areas you may find of interest that are not fully covered here include ERISA 404(c) Compliance and Fiduciary Duty and Fiduciary Responsibility and Liability Issues.

The Misperception of Fiduciary Risk and Active Management in DC Plans: A Legal Perspective

Abstract: Plan sponsors face increasingly complex fiduciary requirements, as well as pressure to provide an optimal plan experience for participants at a reasonable cost. Making investment selection decisions under these conditions can prove challenging. This white paper aims to help fiduciaries navigate the waters of plan investment selection and monitoring processes.

Source: Troweprice.com, March 2017

401k Index Funds -- They Make it Easy to Reduce Fiduciary Liability

Abstract: Investment in equity index funds -- and other passively-managed investments designed to track a market index -- is exploding. If you are a 401k fiduciary, this trend is great news. While it can be difficult for 401k fiduciaries to insulate themselves from investment-related liability using actively-managed funds, this job can be dead simple using index funds.

Source: Employeefiduciary.com, February 2017

Structuring a Plan Committee: Who Should Participate?

Abstract: There are no specific legal requirements regarding the number of members or who should or should not sit on a retirement plan committee. However, there are common practices plan sponsors might keep in mind that can serve as guidelines for establishing this body.

Source: Plansponsor.com, February 2017

Six Questions to Ask at Your Next Investment Committee Meeting

Abstract: Every plan, and every investment committee, is unique, and yet, conducted properly, there are inevitably areas of commonality. Here are some questions that could enhance the discussion, if not the outcome, at your next investment committee meeting.

Source: Asppa.org, January 2017

The Role of the Investment Committee in Your DC Plan

Abstract: The New Year is a perfect time to address many of the annual review items in the 401k compliance and governance checklist. As the New Year unfolds, plan sponsors may want to evaluate the composition of their Investment Committee.

Source: 401ktv.com, December 2016

Establishing a Strong Investment Committee

Abstract: It's not enough to simply have an IPS. You also want to establish an engaged and informed investment committee, and task it with keeping your plan's IPS alive and well over time. While there is no such thing as a "perfect," one-size-fits-all investment committee, there are several broad factors to consider as you form and maintain a committee best suited for your plan. These include: committee size, make-up, operations and documentation procedures.

Source: Alliantwealth.com, December 2016

What the DOL's Final Fiduciary Rule Means for Plan Committees

Abstract: The DOL's Final fiduciary rule is a significant regulatory initiative, and thus it is important to understand how it impacts retirement plan committees' fiduciary responsibilities and committee relationships with plan service providers. This article focuses on some of the implications the new fiduciary rule will have on retirement plan committee responsibilities.

Source: Wagnerlawgroup.com, September 2016

Narrowing in on the Right Approach to DC Menu Design

Abstract: This paper seeks to explore the various approaches to menu design and identify how plan demographics and participant behavior can aid in determining what may be most appropriate for a specific plan.

Source: Manning-Napier.com, August 2016

The Problem With Investment Committees

Abstract: The decisions which have the most negative impact on investment results tend to be associated with capitulating on a good strategy after a stretch of bad performance. In fact, capitulation can evolve into a pattern of selling low and buying high as the investor seeks to recoup foregone returns.

Source: Russell.com, June 2016

How to Conduct an Annual Investment Review

Abstract: A well-established and implemented investment policy statement is one of your best defenses against potential legal challenges in light of recent court rulings. But it's not enough just to create an investment policy statement, you must follow through on the review procedures it outlines.

Source: Investmentnews.com (registration may be required), June 2016

The Evolution of Collective Investment Trusts and Considerations for Plan Sponsors

Abstract: Plan sponsors have increasingly focused on finding low-cost investments and more transparent fee structures for their retirement plans, in part due to the increasing number of headlines related to fee-based litigation issues. This paper provides an overview of and trends surrounding CITs, and outlines what plan sponsors should consider when looking at adding CITs to their plan lineup.

Source: Porteval.com, June 2016

Constructing a DC Contribution Investment Lineup: Four Best Practices

Abstract: As fiduciaries, plan sponsors are called upon to put participants' interests foremost in selecting and monitoring investments for their retirement plan. This 16-page paper proposes four best practices for constructing a 401k plan investment lineup. The best practices provide a road map that plan sponsors can use to evaluate and improve the investment offerings in their DC plans.

Source: Vanguard.com, April 2016

Winning Strategies for Selecting Retirement Plan Investment Options

Abstract: Recent litigation has affected the process retirement plan fiduciaries use to select and monitor their investment options. This webinar helps you make sense of these changes and provide actionable advice for fiduciaries who select investment options.

Source: Multnomahgroup.com, February 2016

Using Investment Menu Design to Improve Participant Outcomes

Abstract: The investment menu structure may be just as important as the actual investment options themselves. Properly done, a well-designed investment menu can direct behaviors and give participants the confidence they need to feel comfortable with their investment decisions.

Source: Strategicbenefitservices.com, February 2016

New Guidance on SRIs, What Plan Committees Need to Know

Abstract: Offers insight to managing economically targeted investments. The authors suggest that committees need to know the following when selecting investments that reflect ESG factors: Compare options in the same asset class against the market and consider each alternative using common measures; Understand whether ESG features will affect the expected return; and, Document the assessment that is made and monitor the decision frequently.

Source: Drinkerbiddle.com, February 2016

Streamlined DC Investment Menu Could Save Participants Millions

Abstract: Researchers with The Wharton School at the University of Pennsylvania strive to quantify participants' behaviors before and after a fundamental rethinking of the DC plan investment menu.

Source: Plansponsor.com, January 2016

Six Questions to Ask at Your Next Investment Committee Meeting

Abstract: Every plan and investment committee is unique, and yet, conducted properly, there are inevitably areas of commonality. Here are some questions that could enhance the discussion, if not the outcome, of your next meeting.

Source: Asppa.org, December 2015

An Employer Guide on How to Set up a Retirement Plan Committee

Abstract: Retirement plan committees, regardless of the size of the plan sponsor, can be an effective method of managing a retirement plan. This article, by attorney Ary Rosenbaum, is about how retirement plan sponsors can use a plan committee correctly and some of the things they should avoid by setting one up.

Source: Jdsupra.com, November 2015

Seven Qualitative Factors for Evaluating DC Plan Investments

Abstract: In addition to quantitative analysis, fiduciaries should consider applying qualitative factors, which can help detect organizational instability. Organizational instability, over time, usually leads to underperformance.

Source: Fi360.com, October 2015

Evaluating Target-Date Funds -- A Fiduciary's Guide

Abstract: This guide is focused on the practical steps to take during the evaluation process -- which may include comparison and selection of TDFs, understanding their underlying investments, reviewing fees, developing communications, and documenting the process. It provides a checklist for periodic reviews, key questions to ask when following the DOL guidelines, and items to consider.

Source: Vanguard.com,, September 2015

The Fiduciary Duty to Monitor -- 401k Plan Investments

Abstract: This article discusses the application of basic principles to the selection of plan investments and investment managers. It further considers this issue exclusively in the context of a 401k plan intended to comply with ERISA section 404(c), in which participants choose investments from a fund menu.

Source: Octoberthree.com, August 2015

Are 401k Investment Menus Set Solely for Plan Participants?

Abstract: This reports key findings are: Mutual fund companies that are trustees of 401k plans must serve plan participants' needs, but they also have an incentive to promote their own funds; The analysis suggests that these trustees tend to favor their own funds, especially their poor-quality funds; That 401k participants do not offset this bias by shifting their savings away from trustee-affiliated funds; and, Fund companies serving as trustees often make decisions that appear to adversely affect employees' retirement security.

Source: Bc.edu, August 2015

Tibble Confirms Onus on Employers for Retirement Plan Fund Monitoring

Abstract: A recent U.S. Supreme Court ruling may have an impact on employers who offer retirement defined contribution plans. The case fortifies the idea that continuous retirement plan monitoring and removal of imprudent investments is a critical duty of all investment fiduciaries and those that fail to do so could face costly litigation.

Source: Mcgladrey.com, July 2015

Additional Thoughts on the Latest Tussey v. ABB Decision

Abstract: Based on this case, past case law, as well as DOL publications including the most recently issued Field Assistance Bulletin 2015-02, there are six basic obligations a fiduciary must consider when selecting and monitoring investments.

Source: Fraplantools.com, July 2015

Infographic: A Framework for Designing Your DC Investment Menu

Abstract: With employees running the gamut from unengaged to motivated self-starters, employers face a challenge: How to assemble a core menu of investment options to serve all of their employees?

Source: Fidelity.com, July 2015

Investment Review Checklist for 401k Plan Committees

Abstract: This Checklist provides a list of issues that an investment or administrative committee of a 401k plan governed by the Employee Retirement Income Security Act of 1974 (ERISA) should consider, including those raised by the US Supreme Court's recent decision in Tibble v. Edison Int'l.

Source: Practicallaw.com, July 2015

Customize DC Investments for Participant Success

Abstract: Most participants in defined contribution (DC) plans are not on track to achieve retirement income adequacy. A key reason is that the investment lineups in most DC plans are structured in a way that reduces participants’ likelihood of implementing well-diversified and age-appropriate investment strategies. Since they are not investment experts, most DC participants would benefit from a simplified lineup.

Source: Aon.com, July 2015

What Retirement Plan Committees Should Know and Discuss

Abstract: Retirement plan committees need knowledge and continuing education about a number of key subjects. And they need ongoing support to stay abreast of industry regulations and trends.

Source: Plansponsor.com, June 2015

Feng Shui of Defined Contribution Menu Construction

Abstract: This paper addresses some of the issues that impact menu construction and investment product selection for defined contribution plans for the purpose of inspiring other sponsors to evaluate the harmony between their plan design and their menu construction.

Source: Multnomahgroup.com, June 2015

An Economist's Perspective of Fiduciary Monitoring of Investments

Abstract: A central thesis is that ongoing oversight is an exercise in risk management and that risk management is a never ending process. The article emphasizes the importance of (a) examining multiple risk factors and not relying on performance numbers alone, (b) understanding the presence of financial leverage (should it exist), (c) clarifying the role of a service provider when an outside party is used, and (d) letting participants know about the type of monitoring being done by an investment committee.

Source: Pensionriskmatters.com, May 2015

It Pays to Set the Menu: Mutual Fund Investment Options in 401k Plans

Abstract: This paper investigates whether mutual fund families acting as service providers in 401k plans display favoritism toward their own affiliated funds. Using a hand-collected dataset on retirement investment options, paper shows that affiliated mutual funds are less likely to be removed from and more likely to be added to a 401k menu.

Source: Pensionresearchcouncil.org, May 2015

401k Plan Investment Committee Best Practices After Tibble v. Edison

Abstract: Tibble is unremarkable in that it broke no new ground; the ongoing "duty to monitor" has been long-recognized by both fiduciaries and attorneys alike. The principle take-away from Tibble is the reiteration of risk mitigation best practices for fiduciaries tasked with the selection of investment options for an ERISA plan.

Source: Benefitslawadvisor.com, May 2015

Overview of Collective Investment Trusts

Abstract: As part of its CIT Awareness Week, the Coalition of Collective Investment Trusts released this 15 page white paper that provides a look at the history of collective investment trusts, an understanding of how the funds operate, their structure, and when they might be appropriate investment vehicles for eligible retirement plans.

Source: Ctfcoalition.com, March 2015

White Labeling: Is Simpler Better?

Abstract: Many plan sponsors have struggled with the dilemma of how to diversify or expand the menu of core asset classes offered in their plans without making it more complicated and confusing for participants. One potential remedy is white labeling, which simply means packaging the core lineup in a way that makes it easier for participants to understand and use.

Source: Invesco.com, March 2015

Understanding the Conservative Options for DC Plans

Abstract: This six page paper, produced by Fidelity Investments, reviews the conservative options available to DC plans, discuss the potential advantages/disadvantages of each type of fund offering, and highlight the investment and plan considerations associated with them.

Source: Fidelity.com, March 2015

Improving Plan Selection Through Demographics

Abstract: Fiduciaries who select investment menu options have many factors to consider. Such factors increasingly include plan participant demographics, which today means far more than participant ages and retirement timeframe. Article reviews some other demographic factors to consider.

Source: Benefitnews.com, March 2015

Seven Qualitative Factors for Evaluating Investments

Abstract: Due diligence is the heart and soul of investment selection. A good due diligence process objectively whittles down the universe of available funds to just those that meet your high standards for inclusion in an investment portfolio. Here are seven qualitative factors that a fiduciary should consider implementing into their due diligence process.

Source: Fi360.com, February 2015

Monitoring 401k Investments Doesn't End

Abstract: The pivotal question under review by the Supreme Court is whether an imprudent fund selection decision by retirement plan fiduciaries constitutes a one-time breach or triggers a succession of breaches if the fiduciaries fail to address the imprudent position during investment-monitoring activities.

Source: Investmentnews.com (free registration may be required), January 2015

A Road Less Travelled: Including Alternative Investments in a 401k Plan

Abstract: There has been a steadily increasing acceptance of alternative investments as part of a retirement plan's investment portfolio, including in 401k plans. Their appeal lies in their unique asset classes and investment strategies which offer potentially higher returns, diversification, or downside risk protection. This article by Marcia Wagner discusses some of the issues raised by including alternative investments in 401k plan investment menus.

Source: Wagnerlawgroup.com, November 2014

ERISA Fiduciary Decisions - Making Changes to Your Qualified Plan's Investment Lineup

Abstract: There are multiple reasons that could prompt a fiduciary committee to consider making changes in their retirement plan's investment lineup. Poor performance, eliminating duplicate and overlapping funds, expanding investments alternatives, organizational changes at the fund manager level, evaluation of fees, etc., are all potential reasons for considering investment alternative changes. This four page article summarizes the technical requirements and recommended procedures in making changes to your plan's investment lineup.

Source: Alston.com, November 2014

White Labeling DC Plan Investments May Offer Advantages

Abstract: Among approximately 75 large employers, nearly one-quarter (24%) are currently using a white label approach to naming defined contribution plan investment options, Aon Hewitt finds.

Source: Planadviser.com, September 2014

Process for Terminating Investment Managers Is Important

Abstract: While much time is spent selecting investment managers, not nearly enough time is spent in establishing a processing for terminating such managers, says a recent paper from the Strategic Investment Group.

Source: Planadviser.com, August 2014

Interesting, Risky, or Downright Dumb Retirement Plan Investments

Abstract: Most retirement plans today follow a rational investment process and keep it simple with a mix of good quality funds covering an appropriate spectrum of asset classes. But for every rule, there is an exception, and what Pete Swisher lays out in this article is just a sampling of the exceptions; interesting, risky, or downright stupid investments that illustrate useful lessons in retirement plans.

Source: Pentegra.com, July 2014

Designing a 'Best Practices' Participant Directed Retirement Plan Investment Menu

Abstract: Designing an industry "best practices" investment menu for a participant directed retirement plan requires a lot more thought than merely filling the Morningstar style boxes and calling it a day. Experience has shown that participants often frustrate the best intentioned expert who tries to build these investment line-ups. Understanding Behavioral Finance is key to overcoming many of the obstacles participants have when interacting with their plan's investment menu.

Source: Francisinvco.com, July 2014

The Role of Diversity in Investment Committee Effectiveness

Abstract: As the nation's demographics continue to change, studies have shown that more diverse investment committees often produce fresh perspectives and a greater level of deliberation before reaching decisions. In this paper, author Catherine Gordon of Vanguard Investment Strategy Group presents results from survey research on whether corporations and other organizations are embracing diversity on their investment committees.

Source: Vanguard.com, June 2014

Internal Controls for Retirement Plans

Abstract: Good fundamental internal controls in the operation of retirement plans are the bedrock of fiduciary and compliance requirements. Retirement plan operations and internal controls are complicated, frequently ignored, and a potential source of significant compliance breaches. The fundamental tenants of good internal controls are segregation of duties, reporting & reconciliation, and oversight of outsourced administration functions. This paper will broadly discuss these fundamental tenants.

Source: Multnomahgroup.com, June 2014

Common Fiduciary Considerations Related to Target-Date Options

Abstract: Given the variety of target-date options available in the marketplace today, how does a plan fiduciary determine which family is right for a specific plan? When evaluating target-date options, it is important to keep in mind that quantitative factors play an important role. However, there is much more to target-date options than a rating score or a performance track record over a single time period or environment.

Source: Manning-Napier.com, May 2014

ERISA Fiduciary Guidance: Making a "Watch List" Work

Abstract: Most investment policy statements provide for a "watch list." An investment alternative is put on a watch list when the investment committee determines that a closer review of the alternative is necessary. The nature of the watch list process has the tendency to tempt a committee and its advisors to do the very thing that investors are warned to avoid: selling low and buying high.

Source: Bsk.com, May 2014

Expert Q&A on Outsourcing Fiduciary Investment Responsibilities

Abstract: Fiduciaries who outsource their investment responsibilities to third-party service providers must do so prudently, considering the interests of the plan and its participants, and in a manner consistent with the terms of the plan documents. This is an expert Q&A with David N. Levine and Allison Tumilty of Groom Law Group on issues employers should consider when outsourcing fiduciary investment responsibilities.

Source: Practicallaw.com, April 2014

Do You Monitor Your Plan's Investment Decisions?

Abstract: A responsible plan fiduciary wisely selects and monitors investment decisions. These decisions are supposed to be for the exclusive benefit of your employees and their beneficiaries. That includes both the providers and the investment decisions they make. To keep yourself from unnecessary scrutiny, you should prepare and adopt an investment policy statement. The Center for Fiduciary Studies views this as the most critical function a fiduciary performs.

Source: 401kadvisor.us, April 2014

Got an ERISA 3(21) Fiduciary by Your Side?

Abstract: In today's regulatory and legal climate you should have an ERISA 3(21) investment advisor. This special type of investment advisor is defined by the Employee Retirement Income Security Act and acts as a co-fiduciary on your plan. Is your 401k advisor a fiduciary?

Source: 401kadvisor.us, March 2014

How Do Your Investment Committee Meetings Measure Up?

Abstract: Investment committees play a key role in the deployment of the $18 trillion or so of institutional assets in the U.S. More often than not, it is an investment committee that establishes strategy, oversees critical asset allocation decisions and selects the people who take day-to-day responsibility for running the money. But how effective are investment committee meetings?

Source: Russell.com, March 2014

401k Committee Minutes, and Attorney-Client Privilege

Abstract: A Massachusetts district court articulated two guiding principles for attorney-client exceptions to the general rule that favors disclosure, to participants, of the minutes of plan committee meetings. The decision in this case highlights the difficulty of establishing attorney-client privilege.

Source: Paulhastings.com, February 2014

Investment Selection and Monitoring Best Practices

Abstract: In this article, the author contends that, due to changes in the investment process, regulatory and legal environments, the procedures for oversight used by many plan sponsors may no longer be prudent. The article sets out a best practices approach to process, asset allocation and investment monitoring, including 10 analytics plan sponsors should focus on, intended to mitigate fiduciary liability for plan sponsors and improve the investment choices made available to participants.

Source: 401khelpcenter.com, January 2005.


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