plans governed by ERISA must be established and maintained under written
agreements authorizing fiduciaries to control and manage the plan's operation
and administration. ERISA generally considers an entity a fiduciary to the
extent that it holds discretionary authority or responsibility for
administering an employee benefit plan. In this Analysis, Jayne Zanglein and
Susan J. Stabile discuss the rules for fiduciaries who render retirement plan
investment advice for a fee. They write:
Under the Employee Retirement Income Security Act
(ERISA), an "investment manager" must acknowledge its status as a
fiduciary in writing and must be a registered investment adviser, a bank, or an
insurance company. An investment manager also must have "the power to
manage, acquire, or dispose of any asset of a plan" and therefore
exercises discretionary authority or control with respect to plan assets.
Regulations issued by the United States' Department
of Labor (DOL) describe what constitutes investment advice.
Under those regulations, a person renders investment
advice if she:
(i) renders advice to the plan as to the value of
securities or other property, or makes recommendations as to the advisability
of investing in, purchasing, or selling securities or other property; and
(ii) ...directly or indirectly...
(A) has discretionary authority or control...with
respect to purchasing or selling securities or other property for the plan; or
(B) renders any advice...on a regular basis...
[with the understanding] that such services will serve as a primary basis for
investment decisions with respect to plan assets, and that such person will
render individualized investment advice to the plan based on the particular
needs of the plan regarding such matters as, among other things, investment
policies or strategy, overall portfolio composition, or diversification of plan
Under this definition, any person who advises the
trustees as to plan investments for a fee is a fiduciary. However, an
investment advisor is a fiduciary only with respect to plan assets over which
he has discretionary authority, control, or responsibility.
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