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| Benefits of Using Investment Advisors & Managers |
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Using investment advisors or investment managers won't resolve all fiduciary liability issues, but it can help. Here are three benefits of using investment advisors or investment managers at the plan level:
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Helps satisfy ERISA |
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Helps participants make investment elections |
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Reduces risk of liability |
As used in ERISA, an "Investment Advisor" and "Investment Manager" aren't the same, and plans can offer one or both. Here are some differences:
| Investment Advisor |
Investment Manager |
| Offers investment advice to the plan and/or participants |
Does not offer investment advice, but makes the actual investment decisions on behalf of participants |
Example: The ABC Company Plan offers its participants access to the services of an Investment Advisor. The Advisor can help a participants by:
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Determining the particpant's time horizon, risk tolerance and other key factors, and |
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Making investment recommendations based on those factors. |
It is then up to the participant to evaluate and implement the recommendations and to continue to consult with the Advisor on an ongoing basis. |
Example: The ABC Company Plan offers its particpants access to the services of an Investment Manager. The Manager accepts discretion over the management of a participant's account, including:
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Determining and implementing investment decisions, |
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Automatically adjusting and revising those decisions on an ongoing basis as necessary, and |
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Providing Reports to the participant on a regular basis. |
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