CPFA Exam Questions and Correct
Answers
Under the DOL regulation, many advisors to retirement plans and their participants will
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be - answers3(21) fiduciaries. They will act alongside other fiduciary service providers
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who are also not necessarily named in the plan document but who exercise
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discretionary control over plan provisions or plan investments.
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The advisor should educate the - answersplan sponsor about hiring fiduciary service
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providers, including the different roles service providers, including the different roles
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service providers may take on within the plan, how to select a qualified candidate, and
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the plan sponsor's ongoing responsibility to monitor them.
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The fiduciary definition has two parts: - answerswho is a fiduciary
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to what extent the person is a fiduciary
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Clarifying fiduciary status is arguably incomplete without addressing both.
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A best practice for a service provider's formal description of services might therefore
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include two parts: - answersa. an acknowledgment of fiduciary status
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b. clarification as to the extent of responsibilities
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As a non-fiduciary advisor, you can - answerseducate your client and present possible
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investments for the Retirement Plan Committee consideration.
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If you recommend a specific fund replacement to the plan sponsor or plan participants,
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you are considered to be - answersgiving investment advice and are therefore a
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functional fiduciary to the plan.
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If fiduciaries of participants use your recommendations - as opposed to information - to
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make investment decisions, this could be considered - answersa fiduciary act
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As a non-fiduciary advisor, you can meet with your client on a recurring basis
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(quarterly, annually, etc) if providing - answersgeneral investment reports or
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discussing the appropriateness of the investments to the plan without making specific
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investment suggestions.
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Plan fiduciaries will almost always have to hire - answersservice providers for their
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plan under their ERISA "duty to obtain expert assistance."
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As a best practice, the advisor can help fiduciaries select: - answersthe service
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providers, which usually includes a TPA and a record keeper.
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, In owner driven smaller plans, the advisor can assist the - answersplan sponsor's HR
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staff - which is likely to be one person in working with the various plan service
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providers.
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In larger participant driven plans, the advisor can work with - answersthe HR director,
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CFO, and the retirement plan committee to evaluate service providers.
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A 3(21) fiduciary does not serve as a fiduciary investment manager, but instead
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usually as - answersinvestment advice fiduciary
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f your client wants an advisor to manager plan investments, or just the QDIA, they can
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hire a - answers3(38) fiduciary advisor.
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A 3(21) fiduciary advisors can recommend investments but the final decision on which
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investments to choose is up to the - answersplan fiduciaries.
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A 3(16) plan administrator can take on administrative duties for the plan but does not
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act in - answersan investment capacity.
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A non-fiduciary advisors can provide - answerseducation
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The DOL is not required to be notified if - answersthe plan hires a 3(21) advisor.
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The fiduciaries should do a review of the service provider qualifications in order to
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prove a - answersprudent process was not followed when selecting the service
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provider. They should also review the service agreement, document the decision
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process, and have a service agreement with the 3(21) advisor.
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A 3(21) advisor fiduciary is considered a - answersfiduciary to the plan, but different
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than advisors working as 3(38) fiduciaries, it is rarely named in the plan document.
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The service agreement between the plan sponsor and the TPA is what determines if -
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answersa TPA will work as a 3(16) fiduciary Plan Administrator.
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ERISA 3(16) fiduciaries serve as the - answers"Plan Administrator" and are
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responsible for administrative responsibilities in the plan. These include assuring the
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plan operation remains in compliance with the plan document, providing administrative
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and compliance documents for the fiduciary file and assuring that employee notices
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are drafted and distributed.
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ERISA 3(21) and 3(38) fiduciaries serve as - answersinvestment fiduciaries and their
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main duty under ERISA is to provide investment advice.
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3(38) fiduciaries may also serve as the - answersnamed investment manager for the
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plan, and unlike 3(21) investment advice fiduciaries, will have discretionary control
vv vv vv vv vv vv vv vv vv vv vv
over plan investments.
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Answers
Under the DOL regulation, many advisors to retirement plans and their participants will
vv vv vv vv vv vv vv vv vv vv vv vv
be - answers3(21) fiduciaries. They will act alongside other fiduciary service providers
vv vv vv vv vv vv vv vv vv vv vv vv
who are also not necessarily named in the plan document but who exercise
vv vv vv vv vv vv vv vv vv vv vv vv vv
discretionary control over plan provisions or plan investments.
vv vv vv vv vv vv vv vv
The advisor should educate the - answersplan sponsor about hiring fiduciary service
vv vv vv vv vv vv vv vv vv vv vv
providers, including the different roles service providers, including the different roles
vv vv vv vv vv vv vv vv vv vv vv
service providers may take on within the plan, how to select a qualified candidate, and
vv vv vv vv vv vv vv vv vv vv vv vv vv vv vv
the plan sponsor's ongoing responsibility to monitor them.
vv vv vv vv vv vv vv vv
The fiduciary definition has two parts: - answerswho is a fiduciary
vv vv vv vv vv vv vv vv vv vv
to what extent the person is a fiduciary
vv vv vv vv vv vv vv
Clarifying fiduciary status is arguably incomplete without addressing both.
vv vv vv vv vv vv vv vv
A best practice for a service provider's formal description of services might therefore
vv vv vv vv vv vv vv vv vv vv vv vv
include two parts: - answersa. an acknowledgment of fiduciary status
vv vv vv vv vv vv vv vv vv vv
b. clarification as to the extent of responsibilities
vv vv vv vv vv vv vv
As a non-fiduciary advisor, you can - answerseducate your client and present possible
vv vv vv vv vv vv vv vv vv vv vv vv
investments for the Retirement Plan Committee consideration.
vv vv vv vv vv vv vv
If you recommend a specific fund replacement to the plan sponsor or plan participants,
vv vv vv vv vv vv vv vv vv vv vv vv vv
you are considered to be - answersgiving investment advice and are therefore a
vv vv vv vv vv vv vv vv vv vv vv vv vv
functional fiduciary to the plan.
vv vv vv vv vv
If fiduciaries of participants use your recommendations - as opposed to information - to
vv vv vv vv vv vv vv vv vv vv vv vv vv
make investment decisions, this could be considered - answersa fiduciary act
vv vv vv vv vv vv vv vv vv vv vv
As a non-fiduciary advisor, you can meet with your client on a recurring basis
vv vv vv vv vv vv vv vv vv vv vv vv vv
(quarterly, annually, etc) if providing - answersgeneral investment reports or
vv vv vv vv vv vv vv vv vv vv
discussing the appropriateness of the investments to the plan without making specific
vv vv vv vv vv vv vv vv vv vv vv vv
investment suggestions.
vv vv
Plan fiduciaries will almost always have to hire - answersservice providers for their
vv vv vv vv vv vv vv vv vv vv vv vv
plan under their ERISA "duty to obtain expert assistance."
vv vv vv vv vv vv vv vv vv
As a best practice, the advisor can help fiduciaries select: - answersthe service
vv vv vv vv vv vv vv vv vv vv vv vv
providers, which usually includes a TPA and a record keeper.
vv vv vv vv vv vv vv vv vv vv
, In owner driven smaller plans, the advisor can assist the - answersplan sponsor's HR
vv vv vv vv vv vv vv vv vv vv vv vv vv
staff - which is likely to be one person in working with the various plan service
vv vv vv vv vv vv vv vv vv vv vv vv vv vv vv vv
providers.
vv
In larger participant driven plans, the advisor can work with - answersthe HR director,
vv vv vv vv vv vv vv vv vv vv vv vv vv
CFO, and the retirement plan committee to evaluate service providers.
vv vv vv vv vv vv vv vv vv vv
A 3(21) fiduciary does not serve as a fiduciary investment manager, but instead
vv vv vv vv vv vv vv vv vv vv vv vv
usually as - answersinvestment advice fiduciary
vv vv vv vv vv vv
f your client wants an advisor to manager plan investments, or just the QDIA, they can
vv vv vv vv vv vv vv vv vv vv vv vv vv vv vv
hire a - answers3(38) fiduciary advisor.
vv vv vv vv vv vv
A 3(21) fiduciary advisors can recommend investments but the final decision on which
vv vv vv vv vv vv vv vv vv vv vv vv
investments to choose is up to the - answersplan fiduciaries.
vv vv vv vv vv vv vv vv vv vv
A 3(16) plan administrator can take on administrative duties for the plan but does not
vv vv vv vv vv vv vv vv vv vv vv vv vv vv
act in - answersan investment capacity.
vv vv vv vv vv vv
A non-fiduciary advisors can provide - answerseducation
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The DOL is not required to be notified if - answersthe plan hires a 3(21) advisor.
vv vv vv vv vv vv vv vv vv vv vv vv vv vv vv
The fiduciaries should do a review of the service provider qualifications in order to
vv vv vv vv vv vv vv vv vv vv vv vv vv
prove a - answersprudent process was not followed when selecting the service
vv vv vv vv vv vv vv vv vv vv vv vv
provider. They should also review the service agreement, document the decision
vv vv vv vv vv vv vv vv vv vv vv
process, and have a service agreement with the 3(21) advisor.
vv vv vv vv vv vv vv vv vv vv
A 3(21) advisor fiduciary is considered a - answersfiduciary to the plan, but different
vv vv vv vv vv vv vv vv vv vv vv vv vv
than advisors working as 3(38) fiduciaries, it is rarely named in the plan document.
vv vv vv vv vv vv vv vv vv vv vv vv vv vv
The service agreement between the plan sponsor and the TPA is what determines if -
vv vv vv vv vv vv vv vv vv vv vv vv vv vv
answersa TPA will work as a 3(16) fiduciary Plan Administrator.
vv vv vv vv vv vv vv vv vv vv
ERISA 3(16) fiduciaries serve as the - answers"Plan Administrator" and are
vv vv vv vv vv vv vv vv vv vv
responsible for administrative responsibilities in the plan. These include assuring the
vv vv vv vv vv vv vv vv vv vv vv
plan operation remains in compliance with the plan document, providing administrative
vv vv vv vv vv vv vv vv vv vv vv
and compliance documents for the fiduciary file and assuring that employee notices
vv vv vv vv vv vv vv vv vv vv vv vv
are drafted and distributed.
vv vv vv vv
ERISA 3(21) and 3(38) fiduciaries serve as - answersinvestment fiduciaries and their
vv vv vv vv vv vv vv vv vv vv vv
main duty under ERISA is to provide investment advice.
vv vv vv vv vv vv vv vv vv
3(38) fiduciaries may also serve as the - answersnamed investment manager for the
vv vv vv vv vv vv vv vv vv vv vv vv
plan, and unlike 3(21) investment advice fiduciaries, will have discretionary control
vv vv vv vv vv vv vv vv vv vv vv
over plan investments.
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