It will come as no surprise that these are trying times for retirement plan fiduciaries. The good news, however, is that recent events have spurred a renewed sense of interest in developing practical strategies for improving the fiduciary process.

Becoming an engaged and effective plan fiduciary will make your clients an invaluable asset to the people who depend on them to safeguard their retirement savings. In that regard, here are six ways to improve.

1. Hold fiduciary meetings: Meetings should be held regularly (best practice would be four times per year), and more often as circumstances may demand. Schedule them well in advance, and detailed agendas and all other relevant materials should be distributed well ahead of time. Each meeting should be well-organized and documented thoroughly through committee minutes.

2. Review and enforce service provider contracts: Too often, service agreements with investment managers, recordkeepers and other providers are executed, only to collect cobwebs until a problem arises. Reviewing such agreements on a regular basis is a best practice for advisers as well. Clear, determinable performance standards for the provider should be included.

To the extent standards are not met, the penalties should be consistently enforced and insistence that the provider's performance must improve should be well-documented. In addition, such agreements should contain comprehensive indemnification provisions for fiduciaries to protect them against liability for the actions of others.

3. Review 404(c) compliance: Many fiduciaries are unaware of the magnitude of notices and other materials that must be provided to participants to ensure 404(c) protection against fiduciary liability under participant-directed plans. (Section 404(c) of ERISA provides protection from fiduciary liability under participant-directed plans where certain conditions have been satisfied.)

If a fiduciary is unsure, ask the plan's attorney for a list, and confirm with the applicable service provider(s) that all requirements are being met. There is a separate list of documents that must be provided to participants who are automatically invested in a qualified default investment alternative.

Under Section 404(c) of ERISA, fiduciaries may also be relieved of liability relating to QDIAs, which are default investments in which participants' accounts are invested in the absence of a specific investment election, subject to the satisfaction of certain requirements.

4. Maximize fiduciary protection: In addition to comprehensive fiduciary indemnification provisions, plan documents should specifically provide fiduciaries with significant discretion in making benefit determinations and otherwise administering the plan.

Proper wording will help ensure that a court will review discretionary determinations in a deferential manner and help limit potential liability if a problem should arise. It may be necessary for the employer to amend the plan in this regard.

5. Maintain a fiduciary charter: In the context of a fiduciary committee or otherwise, it is important that each member's responsibilities be memorialized in a written document to promote efficient administration and to make sure individuals are held accountable for their performance.

6. Keep up with changes in the law: Being an engaged and effective fiduciary requires knowing the rules of the game, which are in a constant state of flux. In particular, we expect regulatory guidance on the following topics in the months to come:

• Target-date/lifecycle funds. While these funds certainly have their advantages, the DOL and SEC are looking at them closely. In particular, regulators are considering "normalizing" the required asset mixes across the industry for all funds with the same projected retirement date, and are considering the issue of the conflicts of interest that arise when fund providers use their own "in-house" funds to invest in various asset classes.

• Fee disclosure. Congress is considering a bill that would mandate significant new fee disclosures to participants, including a detailed fee comparison chart.

Plan fiduciaries should be truly engaged and enthusiastic about their roles. While, like any job, acting as a plan fiduciary will have its peaks and valleys, being entrusted with the job is something in which one can and should take pride.

Do not be afraid, but instead, embrace change and use the current market conditions as an opportunity and a mandate to strengthen the fiduciary process, and both the fiduciary and plan participants will reap the benefits. As a wise man (Thomas Edison) once said: “As a cure for worrying, work is better than whiskey.”

Wolfe can be reached at David.Wolfe@dbr.com and Waldbeser at Joshua.Waldbeser@dbr.com.

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