A 3(38) investment fiduciary, also known as an ERISA Section 3(38) investment manager, is a type of fiduciary role defined under the Employee Retirement Income Security Act (ERISA) in the United States. ERISA is a federal law that sets standards for the operation and management of employee benefit plans, including retirement plans.

A 3(38) investment fiduciary is an independent investment manager or entity appointed by the plan sponsor or fiduciary of a retirement plan, such as a 401(k) plan, to have full discretion and control over the selection and monitoring of the plan’s investment options. This fiduciary is responsible for making investment decisions on behalf of the plan and assumes the fiduciary responsibility and liability associated with those decisions.

Here are some key points regarding the role of a 3(38) investment fiduciary:

1. Investment Decision-Making: The 3(38) investment fiduciary has the authority and responsibility to select, manage, and replace the investment options offered within the retirement plan. This includes making decisions regarding the plan’s investment lineup, asset allocation, fund selection, and ongoing monitoring of the investments.

2. Fiduciary Responsibility: By assuming the role of a 3(38) investment fiduciary, the appointed entity takes on the fiduciary responsibility for the investment decisions they make. This means they must act in the best interest of the plan participants and beneficiaries, exercising prudence, diligence, and expertise in their investment-related decisions.

3. Liability Transfer: By delegating investment decisions to a 3(38) investment fiduciary, the plan sponsor or fiduciary can potentially transfer some of the investment-related liability associated with the plan’s investments. The fiduciary assumes responsibility for the investment decisions made within their designated scope.

4. Expertise and Independence: 3(38) investment fiduciaries are expected to have expertise in investment management and possess the necessary knowledge and qualifications to make informed investment decisions. They are typically independent entities separate from the plan sponsor or other plan fiduciaries, helping to mitigate potential conflicts of interest.

It’s important for plan sponsors and fiduciaries to carefully select and monitor the 3(38) investment fiduciary, ensuring that they have the necessary qualifications, experience, and alignment with the goals and objectives of the retirement plan. The fiduciary’s performance and adherence to their fiduciary duties should be regularly reviewed and evaluated.