Beginning in 1974, with the advent of The Employee Retirement Income Security Act (ERISA), those who manage employer benefit plans are considered fiduciaries acting on behalf of participants and beneficiaries are subject to specific standards of conduct.
The standards of conduct required by ERISA are separated into four primary categories:
- Duty of Loyalty – Be loyal to participants and beneficiaries
- Duty of Prudence – Be prudent in making decisions
- Duty of Diversify – Offer a variety of investments
- Duty to Follow Plan Documents – Adhere to plan documents
Fiduciaries agree to make decisions about employee benefits in the best interest of plan participants. The law sees the responsibility as the fiduciary’s, at times holding them personally accountable, negatively impacting their personal assets.