At Fiduciary Symposium, Jeff Mamorsky Says Independents' Role Set to 'Explode'

An independent fiduciary is the "decision maker" on an ERISA plan, the "named fiduciary" in the plan document–a/k/a the "big Kahuna," according to Hutcheson. He or she has the power to name other, limited fiduciaries including the administrator (the plan's "communicator"), investment fiduciary, and the fiduciary responsible for monitoring the plan. The named fiduciary is appointed by the board of the company after the current fiduciary resigns; that "starts the clock ticking" on a three-year residual fiduciary duty of the sponsor.

But what about all the liability being the named fiduciary would involves? Hutcheson says that if you are fulfilling your "responsibilities as a fiduciary," have processes and procedures in place, know the best people or firms to appoint, then there's no liability, only fiduciary responsibility. He asks: "Where's the liability if you are doing the right thing?"

Mamorsky says, however, that it is critically important to "get a legal opinion," in order to make sure that the proper IRS mandated procedures are in place. Otherwise, the plan can become disqualified and the IRS levies heavy sanctions for "failure to follow terms of plan documents," and other IRS violations. "The greatest fiduciary duty an independent fiduciary has is to make sure the plan stays qualified," he explains.

Comments? Please send them to [email protected]. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.