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2016-04-27 :: What's the difference between a Fiduciary and Non-Fiduciary?
What the employer needs to know about their retirement plan!

Granite Insight

What’s the difference between a 3(21) fiduciary and a 3(38) fiduciary? 

Not all fiduciaries are equal! The new rule has many employers confused about what to  do. Many do not realize there are different types of fiduciaries. Even advisors who are forced to become a fiduciary do not realize what is entailed.

Unfortunately, the new rule created a greater burden for the employers, without changing how retirement plans work.

The difference:

A 3(21) fiduciary is a non-discretionary fiduciary. That means the employer must approve all investment selections. Very much like what happens now, but the advisor shares in the liability.

A 3(38) fiduciary is a discretionary fiduciary. That means they have discretion on the investment selections. This is a much higher level of burden.

What is the right fit?

With the new rule in place, employers need to understand that the investments, operations, plan documents and the IPS are all intertwined. Most employers do not take these items into consideration and they are culpable.  If the record-keeper changes a function or the advisor changes an investment, this can undermine the documents.

The right fit will depend on the CEO’s or CFO’s level of experience. Fiduciaries  need to be aware and uphold  and execute on the governing documents.

What can you do to protect your company and help employees:

Here is what to look for:

· The Fiduciary must have experience;  (don’t hire  a person or firm forced to become a Fiduciary)

· The Fiduciary must have a proven investment process;(Morningstar reports or fund fact sheets don’t cut it)

· Hire an ERISA Attorney;

· The Fiduciary must  have experience working with an ERISA Attorney to maintain the plan document and IPS;

· The Fiduciary must  have fiduciary insurance.


Granite Group has been a 3(38) advisor for almost 10 years and has extensive experience with a defined investment process, plan design, IPS , ERISA regulations and producing customized Investment Education to employees.


For Truth, Transparency and Safety  call:

Granite Group Advisors at  203-210-7814.


Additional information: If you would like specific information on operational and investment best practices, please contact Granite Group Advisors. Granite Group is record-keeper and mutual fund neutral.

Disclaimer: This brochure cannot be construed as tax, legal or investment advice. You should seek a qualified Erisa attorney for specific concerns on your plan.



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