ERISA 3(21) & 3(38) Fiduciary Capabilities
Selecting the appropriate fiduciary structure is a critical governance decision for 401(k) plan sponsors. Under the Employee Retirement Income Security Act of 1974 (ERISA), plan sponsors may engage investment professionals in different fiduciary capacities depending on their oversight preferences, internal expertise, and risk management objectives.
Fiduciary Capital Management LLC provides both ERISA §3(21) and ERISA §3(38) fiduciary services to align with the governance needs of plan sponsors and investment committees.
Side-by-Side Fiduciary Comparison
| Feature | ERISA §3(21) Investment Fiduciary | ERISA §3(38) Investment Manager |
|---|---|---|
| Fiduciary Status | Co-Fiduciary | Discretionary Investment Manager |
| Investment Authority | Provides recommendations | Has discretionary authority |
| Final Investment Decision | Plan Sponsor / Committee | Fiduciary Capital Management LLC |
| Investment Changes | Require committee approval | Implemented by Fiduciary Capital Management LLC |
| Ongoing Monitoring | Shared responsibility | Investment monitoring responsibility assumed by Fiduciary Capital Management LLC |
| Sponsor Responsibility | Select, monitor, and make investment decisions | Select and monitor the 3(38) manager |
| Governance Style | Collaborative oversight | Delegated investment authority |
| Appropriate For | Sponsors who want to retain control | Sponsors who prefer delegated investment management |
Fiduciary responsibilities are governed by ERISA and defined by written agreement.
ERISA §3(21) Investment Fiduciary
(Non-Discretionary Support)
When engaged in a 3(21) capacity, Fiduciary Capital Management LLC provides documented investment recommendations and monitoring support. The plan sponsor or investment committee retains final authority over investment decisions.
Services may include:
- Investment performance benchmarking
- IPS development and monitoring
- Watch list identification
- Fund replacement recommendations
- Committee reporting and documentation
This model supports sponsors who prefer active involvement in investment decisions while receiving professional fiduciary guidance.
ERISA §3(38) Investment Manager
(Discretionary Authority)
When engaged as a 3(38) Investment Manager, Fiduciary Capital Management LLC accepts discretionary authority to select, monitor, and replace plan investments as defined under ERISA.
Services may include:
- Investment selection and implementation
- Ongoing performance and risk evaluation
- Manager due diligence
- Investment replacement decisions
- Formal documentation of oversight
Under ERISA, the plan sponsor’s responsibility shifts to prudently selecting and monitoring the 3(38) manager.
Investment Oversight Framework
Regardless of fiduciary structure, Fiduciary Capital Management LLC utilizes a disciplined investment oversight process that may include:
- Benchmark-based performance evaluation
- Peer group and risk-adjusted analysis
- Qualitative manager research
- Watch list protocols
- Documentation of investment decisions
Benchmark comparisons are provided for informational purposes and do not guarantee future performance.
Governance Alignment
Fiduciary Capital Management LLC works collaboratively with plan sponsors to determine the appropriate fiduciary engagement model based on governance preferences, committee expertise, operational capacity, and documentation standards.
Our approach emphasizes structured process, transparency, and ERISA-aligned oversight.
Important Disclosure
Fiduciary status under ERISA is defined by statute and engagement agreement. Services are provided pursuant to a written agreement specifying fiduciary capacity. Participant education services, unless separately contracted for fiduciary advice, are educational in nature and do not constitute individualized investment recommendations.