CPFA Exam Study Guide

CPFA Exam Study Guide Under the DOL regulation, many advisors to retirement plans and their participants will be - 3(21) fiduciaries. They will act alongside other fiduciary service providers who are also not necessarily named in the plan document but who exercise discretionary control over plan provisions or plan investments. The advisor should educate the - plan sponsor about hiring fiduciary service providers, including the different roles service 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: - 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: - a. an acknowledgment of fiduciary status b. clarification as to the extent of responsibilities As a non-fiduciary advisor, you can - 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 - giving investment advice and are therefore a functional fiduciary to the plan. If fiduciaries of participants use your recommendations - as opposed to information - to make investment decisions, this could be considered - a fiduciary act As a non-fiduciary advisor, you can meet with your client on a recurring basis (quarterly, annually, etc) if providing - 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 - service providers for their plan under their ERISA "duty to obtain expert assistance." As a best practice, the advisor can help fiduciaries select: - the service providers, which usually includes a TPA and a record keeper. In owner driven smaller plans, the advisor can assist the - 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 - the HR director, CFO, and the retirement plan committee to evaluate service providers. A 3(21) fiduciary does not serve as a fiduciary investment manager, but instead usually as - investment advice fiduciary f your client wants an advisor