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FIDUCIARY LIABILITYPlan sponsors will remain responsible for prudently selecting and reviewing advice providers, while the advisers themselves will be personally liable for the advice they give. —Source: Pension Protection Act Opens New Doors to Advice,
Many employers have been wary of providing much more than generalized financial education to their employees, fearing that they might be held liable for poor outcomes if they provided individualized advice. But with the passing of the Pension Protection Act of 2006 (PPA) the risk has essentially been removed. The PPA encourages employers to provide their employees with access to high-quality investment advice. The legislation not only affirms that face-to-face, personally-tailored investment advice is permissible within 401(k) retirement accounts, but it also spells out the conditions under which it can be offered. This includes tough fiduciary and disclosure safeguards to ensure that advice provided to employees is solely in the employee's best interest. Additionally, beginning in 2007, a new exemption provides protection to a plan sponsor who retains a qualified "fiduciary advisor" to assist participants in making their investment direction decisions. Generally, the advisor must accept "fiduciary" status under ERISA and operate under strict statutory requirements and restrictions, including restrictions on the nature of the fees that the advisor can charge. The plan sponsor is protected from liability for the investment advice given by the advisor, but remains generally responsible for the prudent selection and monitoring of the advisor. StraightLine meets all of the requirements set out by the PPA. Furthermore, to assist you in satisfying your duty of prudence in selecting and reviewing managed account providers, StraightLine will provide you with detailed reviews of the following:
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