CPFA Exam Questions and Correct Answers

CPFA Exam Questions and Correct
Answers
Under the DOL regulation, many advisors to retirement plans and their participants will be
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- answers3(21) fiduciaries. They will act alongside other fiduciary service providers who
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are also not necessarily named in the plan document but who exercise discretionary
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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 the
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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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byou are considered to be - answersgiving investment advice and are therefore a
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bfunctional fiduciary to the plan. b b b b




If fiduciaries of participants use your recommendations - as opposed to information - to
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bmake 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 (quarterly,
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annually, etc) if providing - answersgeneral investment reports or discussing the
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appropriateness of the investments to the plan without making specific investment
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suggestions.
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Plan fiduciaries will almost always have to hire - answersservice providers for their plan
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under their ERISA "duty to obtain expert assistance."
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As a best practice, the advisor can help fiduciaries select: - answersthe service providers,
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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 staff
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b- which is likely to be one person in working with the various plan service providers.
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In larger participant driven plans, the advisor can work with - answersthe HR director,
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bCFO, 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
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- answersinvestment advice fiduciary
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f your client wants an advisor to manager plan investments, or just the QDIA, they can hire
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ba - 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 act in
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- 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 prove a
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- answersprudent process was not followed when selecting the service provider. They
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should also review the service agreement, document the decision process, and have a
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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 than
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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 responsible
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for administrative responsibilities in the plan. These include assuring the plan operation
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remains in compliance with the plan document, providing administrative and compliance
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documents for the fiduciary file and assuring that employee notices are drafted and
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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 plan,
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and unlike 3(21) investment advice fiduciaries, will have discretionary control over plan
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investments.
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