On February 14, 2007, three attorneys fromo Ropes & Gray spoke in
Under ERISA, investment advice brings about a fiduciary responsibility. A person who gives investment advice for a fee is a fiduciary. If people go to human resources or an attorney or someone in a 401(k) investment committee to ask which fund to invest in, the proper answer may be that no investment advice is allowed. It should be the participant’s sole choice what to invest in. Other persons do not want to be considered a fiduciary by giving investment advice.
If the person asks what do other people invest in, the proper answer may be that confidential personnel information are not allowed to be disclosed.
The participant should go to the financial adviser assigned to the 401(k) plan. The investment committee of a 401(k) plan is responsible for engaging a financial adviser, but not for the advice that the person provides.
Some plans offer a computer model to provide advice on what funds to invest in. Whether such models should be used depend on who prepares the algorithms for the programs. If it is a company that provides a fund in the 401(k) plan, there may be bias in the results.
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