What are your fiduciary responsibilities?

If you offer a 401(k) plan to your employees, you are considered a plan sponsor and a fiduciary. But what is a fiduciary? It’s someone who has the power and the obligation to act for another, under circumstances which require total trust, good faith and honesty.

Fiduciary is a n. from the Latin fiducia, meaning “trust”

Act in a way that is appropriate for someone in a position of trust

Because 401(k) plans are governed by the Employee Retirement Income Security Act (ERISA), you’ll need to follow the ERISA rules, which say you must:

  • Act solely in the interests of plan participants and beneficiaries
  • Act with the care, skill and diligence of a “prudent” person, familiar with such matters
  • Diversify plan investments, with exceptions for investments in company stock
  • Comply with the written plan document

Make sure your investments are appropriate

One of your main responsibilities is to make sure your plan’s investments are currently (and stay) appropriate for your plan participants. That means, you have a diverse selection of investments from which your participants can choose, and you review those investments every quarter or so.

While ERISA doesn’t specify what you should do to make sure the investments are appropriate, you may want to:


  • Your investments’ recent, rolling and risk-adjusted performance vs a peer group or index
  • Fees and expenses vs. a peer group 


  • Changes to portfolio management teams
  • Changes to investment strategy
  • How each investment option complements or contributes to the plan’s overall investment strategy
  • Increases or decreases in the plan’s fees
  • Increases or decreases in the plan’s assets under management

Document your assessments

Whether you review the investments yourself or have a committee do it, you’ll want to make sure to keep detailed notes about the discussions and decisions made. That way, you’ll be able to go back and see what you did later, if anyone questions your processes. 

Help your participants plan for a comfortable retirement

As a plan sponsor, it is your responsibility to make sure your participants understand their plan and how it works. You may also want to help educate them about broader investment and retirement topics, such as:

  • Figuring out how much they’ll need to save for retirement
  • Why diversification and asset allocation are important
  • What kinds of investment risks they face and what to do about them
  • How to keep realistic investment expectations
  • Maintaining a long-term approach
  • Addressing the current economic landscape and how it can affect their investments 

While you can’t give your participants more information about a specific security than they could receive as a shareholder, you can provide broad educational information and guidance in planning for retirement. After all, you want your employees to use their plan as much as possible, and prepare for the future, so they can live comfortably in retirement.

Important Note

AXA believes that education is a key step toward addressing your financial goals, and we’ve designed this material to serve simply as an informational and educational resource. This discussion does not make direct or indirect recommendation of any particular product or of the appropriateness of any particular investment related option. Your needs, goals and circumstances are unique, and they require the individualized attention of your financial professional. But for now, take some time just to learn more. 

The information in this article is not intended as legal or tax advice. You should consult with a financial professional and ERISA counsel to help determine your unique situation and needs.

Asset allocation and diversification do not ensure a profit or protect against a loss in any market.

Investing in stock is subject to market risks including loss of principal.

This article has been written by and is provided for general information purposes only. This material does not constitute an offer or solicitation of any kind and is not intended, and should not be relied upon, as investment, tax, legal, or financial advice or services. 

Securities offered through AXA Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC. Annuity and insurance products, including those issued by AXA Equitable Life Insurance Company (NY NY), offered through AXA Network, LLC, which conducts business in CA as AXA Network Insurance Agency of California, LLC, in UT as AXA Network Insurance Agency of Utah, LLC and in PR as AXA Network of Puerto Rico, Inc.

The retirement plan would be funded by an annuity contract issued and distributed by AXA Equitable Life Insurance Company (AXA Equitable), New York, NY. Annuities contain certain limitations and restrictions.

Contact Us

* Required

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions. 

This information is provided for informational purposes only. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. 

Please be advised that this document is not intended as legal or tax advice.  Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.  The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.

AXA Equitable Life Insurance Company (New York, NY) issues life insurance and annuity products. Securities offered through AXA Advisors, LLC, member FINRA, SIPC.  AXA Equitable Life Insurance Company and AXA Advisors are affiliated and do not provide tax or legal advice.

GE-126447 (06/2017)

Image used for Space here