As regulatory scrutiny increases and the retirement landscape evolves, fiduciary responsibilities are becoming more complex than ever. Ensuring compliance while effectively managing retirement plans requires both strategic planning and a thorough understanding of fiduciary obligations.
In our recent webinar, “Navigating Fiduciary Challenges in 2025,” industry experts discussed the latest fiduciary best practices, regulatory updates, and risk management strategies that plan sponsors must be aware of to fulfill their obligations. Below, we provide a summary of the key takeaways from the session. Be sure to watch the full webinar for an in-depth discussion and expert insights.
Understanding Fiduciary Responsibilities
Fiduciaries are entrusted with the duty to act in the best interests of plan participants. This responsibility includes:
- Duty of Loyalty: Making decisions solely for the benefit of plan participants and beneficiaries.
- Duty of Prudence: Acting with care, skill, and diligence as a knowledgeable professional would.
- Duty to Follow Plan Documents: Ensuring compliance with the plan’s governing documents and policies.
- Duty to Diversify Investments: Mitigating risk by offering a well-balanced investment menu.
Failing to meet these obligations can result in significant liability, including potential lawsuits and regulatory penalties.
Regulatory Updates and Their Impact on Plan Sponsors
2025 brings a wave of regulatory changes that plan sponsors must navigate carefully. Our speakers outlined some of the most pressing updates, including:
- Enhanced DOL Scrutiny: The Department of Labor (DOL) has increased audits and enforcement actions, focusing on excessive fees, investment selection processes, and participant disclosures.
- SECURE 2.0 Implementation: Key provisions, such as expanded automatic enrollment and improved retirement income options, are taking effect, requiring plan sponsors to adjust administrative processes accordingly.
- Cybersecurity Standards: With cyber threats on the rise, fiduciaries are now expected to implement robust security measures to protect participant data.
Best Practices for Reducing Fiduciary Risk
Our expert panelists emphasized several best practices to help plan sponsors manage risk effectively:
1. Establish a Strong Governance Structure
- Maintain a well-documented fiduciary process with a designated oversight committee.
- Conduct regular plan reviews and document all decisions.
2. Review and Benchmark Plan Fees
- Ensure fees are reasonable and transparent.
- Conduct fee benchmarking studies to stay competitive and aligned with industry standards.
3. Conduct Regular Investment Reviews
- Monitor and evaluate investment options to ensure they align with plan objectives.
- Make adjustments as needed based on performance and cost considerations.
4. Enhance Participant Communication
- Provide clear, accessible educational resources to help participants make informed decisions.
- Ensure fee disclosures and investment information are presented in a user-friendly format.
5. Stay Ahead of Cybersecurity Risks
- Work with recordkeepers and third-party administrators to implement security best practices.
- Conduct regular cybersecurity training for fiduciaries and staff handling plan data.
Key Takeaways: Preparing for the Future
Navigating fiduciary challenges in 2025 requires a proactive approach. By staying informed on regulatory changes, maintaining diligent oversight, and implementing best practices, plan sponsors can fulfill their responsibilities while safeguarding participant assets.
For a deeper dive into these topics and more insight, connect with a HUB Advisor.
Important Note
Alex Assaley is registered with Global Retirement Partners, LLC, an SEC registered investment advisor. Global Retirement Partners, LLC is a wholly owned entity of HUB International.
Fred Reish is with Faegre Drinker Biddle & Reath LP. HUB International and Faegre Drinker Biddle & Reath LP. are not affiliated.
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