No matter the size of your company, having an investment committee overseeing your employer-sponsored retirement plan is a critical Fiduciary responsibility.
Your committee could consist of any amount of people, including as few as two. However, the key membership criteria are that you’re your committee should all be qualified members. It is better to have a smaller, well-identified committee with a clear sense of “who is a Fiduciary,” rather than placing everyone involved with the plan on the committee.
Who Should Be an Investment Committee Member?
So, who would qualify to be an investment committee member? First and foremost, they need to be a Fiduciary. You can refer to our piece here about who a Fiduciary is and their role and responsibility within your plan. Under ERISA, a member of the committee is personally liable for their Fiduciary decisions. For this reason, committee members should accept and acknowledge their Fiduciary roles in writing.
Investment Committee Best Practices
Here are several Investment Committee best practices that we have identified and put into place with our clients:
If an organization lacks individuals with appropriate qualifications, the committee members should pursue relevant knowledge through training programs or professional counsel. Investigations by the DOL have requested evidence of Fiduciary training. Plan professional such as an advisor, can provide professional and technical assistance. However, the ultimate responsibility and decision-making always lie with the Fiduciary unless this authority has been specifically delegated.
Investment committee organization is just one of many Fiduciary best practices that we cover as part of our employer-sponsored retirement plan series. We designed this series to help support businesses of any size to help you reduce potential liability and provide a plan that best serves your employees.
Contact us for more information about any of these best practices or to see how we may better support your company and employees with a low-cost, high service employer-sponsored retirement plan.