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CPFA Exam Questions and Answers (100%
Correct Answers) Already Graded A+
Under the DOL regulation, many advisors to retirement plans and
their participants will be Ans: 3(21) fiduciaries. They will act
alongside other fiduciary service providers 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.
The advisor should educate the Ans: plan sponsor about hiring
fiduciary service providers, including the different roles service
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providers, including the different roles service providers may take
on within the plan, how to select a qualified candidate, and the
plan sponsor's ongoing responsibility to monitor them.
The fiduciary definition has two parts: Ans: who is a fiduciary
to what extent the person is a fiduciary
Clarifying fiduciary status is arguably incomplete without
addressing both.
A best practice for a service provider's formal description of
services might therefore include two parts: Ans: a. an
acknowledgment of fiduciary status
, 2
b. clarification as to the extent of responsibilities
As a non-fiduciary advisor, you can Ans: educate your client and
present possible investments for the Retirement Plan Committee
consideration.
If you recommend a specific fund replacement to the plan
sponsor or plan participants, you are considered to be Ans: giving
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investment advice and are therefore a functional fiduciary to the
plan.
If fiduciaries of participants use your recommendations - as
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opposed to information - to make investment decisions, this could
be considered Ans: a fiduciary act
As a non-fiduciary advisor, you can meet with your client on a
recurring basis (quarterly, annually, etc) if providing Ans: general
investment reports or discussing the appropriateness of the
investments to the plan without making specific investment
suggestions.
Plan fiduciaries will almost always have to hire Ans: service
providers for their plan under their ERISA "duty to obtain expert
assistance."
As a best practice, the advisor can help fiduciaries select: Ans:
the service providers, which usually includes a TPA and a record
keeper.
, 3
In owner driven smaller plans, the advisor can assist the Ans: plan
sponsor's HR staff - which is likely to be one person in working with
the various plan service providers.
In larger participant driven plans, the advisor can work with Ans:
the HR director, 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 usually as Ans: investment advice fiduciary
f your client wants an advisor to manager plan investments, or just
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the QDIA, they can hire a Ans: 3(38) fiduciary advisor.
A 3(21) fiduciary advisors can recommend investments but the
final decision on which investments to choose is up to the Ans:
plan fiduciaries.
A 3(16) plan administrator can take on administrative duties for
the plan but does not act in Ans: an investment capacity.
A non-fiduciary advisors can provide Ans: education
The DOL is not required to be notified if Ans: the plan hires a 3(21)
advisor.
, 4
The fiduciaries should do a review of the service provider
qualifications in order to prove a Ans: prudent process was not
followed when selecting the service provider. They should also
review the service agreement, document the decision process,
and have a service agreement with the 3(21) advisor.
A 3(21) advisor fiduciary is considered a Ans: fiduciary to the plan,
but different 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 Ans: a TPA will work as a 3(16) fiduciary Plan
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Administrator.
ERISA 3(16) fiduciaries serve as the Ans: "Plan Administrator" and
are responsible for administrative responsibilities in the plan. These
include assuring the plan operation remains in compliance with
the plan document, providing administrative and compliance
documents for the fiduciary file and assuring that employee
notices are drafted and distributed.
ERISA 3(21) and 3(38) fiduciaries serve as Ans: investment
fiduciaries and their main duty under ERISA is to provide
investment advice.
3(38) fiduciaries may also serve as the Ans: named investment
manager for the plan, and unlike 3(21) investment advice
fiduciaries, will have discretionary control over plan investments.
CPFA Exam Questions and Answers (100%
Correct Answers) Already Graded A+
Under the DOL regulation, many advisors to retirement plans and
their participants will be Ans: 3(21) fiduciaries. They will act
alongside other fiduciary service providers who are also not
necessarily named in the plan document but who exercise
© 2025 Assignment Expert
discretionary control over plan provisions or plan investments.
The advisor should educate the Ans: plan sponsor about hiring
fiduciary service providers, including the different roles service
Guru01 - Stuvia
providers, including the different roles service providers may take
on within the plan, how to select a qualified candidate, and the
plan sponsor's ongoing responsibility to monitor them.
The fiduciary definition has two parts: Ans: who is a fiduciary
to what extent the person is a fiduciary
Clarifying fiduciary status is arguably incomplete without
addressing both.
A best practice for a service provider's formal description of
services might therefore include two parts: Ans: a. an
acknowledgment of fiduciary status
, 2
b. clarification as to the extent of responsibilities
As a non-fiduciary advisor, you can Ans: educate your client and
present possible investments for the Retirement Plan Committee
consideration.
If you recommend a specific fund replacement to the plan
sponsor or plan participants, you are considered to be Ans: giving
© 2025 Assignment Expert
investment advice and are therefore a functional fiduciary to the
plan.
If fiduciaries of participants use your recommendations - as
Guru01 - Stuvia
opposed to information - to make investment decisions, this could
be considered Ans: a fiduciary act
As a non-fiduciary advisor, you can meet with your client on a
recurring basis (quarterly, annually, etc) if providing Ans: general
investment reports or discussing the appropriateness of the
investments to the plan without making specific investment
suggestions.
Plan fiduciaries will almost always have to hire Ans: service
providers for their plan under their ERISA "duty to obtain expert
assistance."
As a best practice, the advisor can help fiduciaries select: Ans:
the service providers, which usually includes a TPA and a record
keeper.
, 3
In owner driven smaller plans, the advisor can assist the Ans: plan
sponsor's HR staff - which is likely to be one person in working with
the various plan service providers.
In larger participant driven plans, the advisor can work with Ans:
the HR director, CFO, and the retirement plan committee to
evaluate service providers.
© 2025 Assignment Expert
A 3(21) fiduciary does not serve as a fiduciary investment
manager, but instead usually as Ans: investment advice fiduciary
f your client wants an advisor to manager plan investments, or just
Guru01 - Stuvia
the QDIA, they can hire a Ans: 3(38) fiduciary advisor.
A 3(21) fiduciary advisors can recommend investments but the
final decision on which investments to choose is up to the Ans:
plan fiduciaries.
A 3(16) plan administrator can take on administrative duties for
the plan but does not act in Ans: an investment capacity.
A non-fiduciary advisors can provide Ans: education
The DOL is not required to be notified if Ans: the plan hires a 3(21)
advisor.
, 4
The fiduciaries should do a review of the service provider
qualifications in order to prove a Ans: prudent process was not
followed when selecting the service provider. They should also
review the service agreement, document the decision process,
and have a service agreement with the 3(21) advisor.
A 3(21) advisor fiduciary is considered a Ans: fiduciary to the plan,
but different than advisors working as 3(38) fiduciaries, it is rarely
named in the plan document.
© 2025 Assignment Expert
The service agreement between the plan sponsor and the TPA is
what determines if Ans: a TPA will work as a 3(16) fiduciary Plan
Guru01 - Stuvia
Administrator.
ERISA 3(16) fiduciaries serve as the Ans: "Plan Administrator" and
are responsible for administrative responsibilities in the plan. These
include assuring the plan operation remains in compliance with
the plan document, providing administrative and compliance
documents for the fiduciary file and assuring that employee
notices are drafted and distributed.
ERISA 3(21) and 3(38) fiduciaries serve as Ans: investment
fiduciaries and their main duty under ERISA is to provide
investment advice.
3(38) fiduciaries may also serve as the Ans: named investment
manager for the plan, and unlike 3(21) investment advice
fiduciaries, will have discretionary control over plan investments.
