Institutional Investment Management

As a plan fiduciary you must carefully determine how a prudent man would institute, document & monitor an investment management program. The management of investment alternatives is an affirmative obligation under ERISA that some plan sponsors have assumed was being properly handled by their service providers. That assumption could prove to be expensive!!!

There is no affirmative obligation under ERISA that plan fiduciaries establish investment policy statements. However, under ERISA’s general fiduciary requirements plan fiduciaries must engage in a prudent process for the selection & monitoring of investment alternatives. The DOL has indicated in Bulletin 94-2 that investment policy statements "serve a legitimate purpose in many plans by helping to ensure that investment decisions are made in a rational manner and are designed to further the purposes of the plan and its funding policy." In addition, for those plans that desire to be 404(c) compliant the preamble to 404(c) regulations dictates an affirmative requirement that fiduciaries prudently select & monitor investments for the plan. EFA believes the only prudent course is to adhere to a specific written process.