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Fiduciary Responsibility

ShareBuilder 401k can lower your business risk

There are some responsibilities owners – and those employees that manage the 401(k) program for the business – take on by offering a retirement plan. Two important items are keeping administrative costs low and ensuring diverse investment offerings. Most employees are glad to have a 401(k), but some are disappointed if there are high expense funds in the plan. That's where the rub can start.

It's common that the 401(k) provider and record-keeper that sell and support your plan have little to no liability for your investments in the plan, or nearly anything else for that matter. If there are concerns or even an employee lawsuit about the fund offerings in the plan, the owner and other "fiduciaries" of your company plan are liable.

Using a Registered Investment Advisor

It can make a lot of sense to use a Registered Investment Advisor (RIA) to select and monitor investment options and serve as an investment co-fiduciary for your plan. By assigning this duty to a RIA, issues around the investment line-up and managing your funds and any model portfolios on-going are now the responsibility of the RIA. It's a nice safeguard.

If you want to minimize this risk, and most do when they are "in the know," be sure to ask the providers that you consider if they will serve as an ERISA 3(38) advisor for the plan. Just know that if you are selecting the funds from a list an advisor or registered representative presented you for your plan, you have not lowered your business risks.

Now you know some insights on why ShareBuilder 401k serves as an ERISA 3(38) RIA for our customers and automatically delivers you the backing of our 7-person Investment Committee.

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