Is 401(k) 3(38) Delegation a Real Risk Transfer or a Fiduciary Illusion?
Michelle Capezza was quoted in a Fiduciary News article examining whether delegating investment discretion to a 3(38)-investment manager meaningfully transfers fiduciary risk or merely creates a false sense of protection for plan sponsors.
Michelle says, “Plan fiduciaries are required to prudently select and monitor 3(38) investment managers to whom they have delegated discretionary investment authority and fiduciary responsibility for plan investments, and while plan fiduciaries cannot interfere with a 3(38) investment manager’s decisions in order to preserve the delegation, they also cannot ignore red flags related to the manager’s process, fees, or conflicts of interest.”
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