Business Owners Have Risk

Hold on. So what you’re saying is I have to actively provide information for my employees for their investments,” a business owner recently asked. “How am I supposed to know what to recommend?” “Yes, as the employer, you have a ‘fiduciary’ responsibility for their retirement plan,” I replied. “This means you need to actively be evaluating the fees they pay, the investment options they can choose, and the investment counsel they have access to.”

This is a conversation that we have, unfortunately, with most business owners. Many employers do not realize that if their company has a 401(k), SIMPLE IRA, or other retirement plan for their business they are, most likely, a fiduciary. This means they have a financial obligation to their employees — and a legal obligation — to prudently take care of their employees’ money. Employers must realize that they are ultimately liable — both ethically and legally — for their company’s, and by extension employees,’ retirement plan.

So what is a “fiduciary?” Put simply, a fiduciary is a person or association that acts in a capacity of trust and is therefore held to higher standards with respect to plan- related actions. An investment fiduciary is responsible for investing the money wisely for the beneficiary’s benefit.

Business owners, company presidents, principal shareholders, corporate officers, and corporate trustees of institutional funds often hold this fiduciary status. Our team helps works with these individuals to help ensure they are meeting their fiduciary obligations.