Plan sponsors are hearing a growing trend of investment advisers and other services providers selling ERISA 3(16) plan administrator services. Sometimes referred to as administrative fiduciary services, the primary pitch is that the service provider can take on more of the administrative functions that would otherwise fall on the plan sponsor and provide additional fiduciary protections in the process. Although using fiduciary liabilitys as a scare tactic is not a new sales pitch for those that have been around the industry for a long time, the additional services offered by the 3(16) plan administrator can sound enticing.
This article provides a high-level discussion of 3(16) services from the perspective of whether it adds value from the plan sponsor perspective. Future articles in this series will explore some of the specific services being offered and will provide suggestions on how sponsors can evaluate those servies.
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