Use of financial advisors to manage investments under a self-directed

[Guest asire2002]

Must a financial advisor qualify as an investment manager under ERISA (e.g., be a registered investment advisor) in order to exercise investment discretion over a participant's account in an ERISA-covered plan? I have my own thoughts but would appreciate any thoughts or experiences you may have.

[mbozek]

ERISA requires that a fiduciary who manages plan assets for a fee must be a registered investment advisor under fed or state law. However under the 404© regs a participant who directs investment of his or her account is not deemed to be a fiduciary. A participants can give a power of attorney to an investment advisor to invest the account. I would assume that an advisor who manages a participants account for a fee must be an investment advisor under ERISA. However, becoming an investment advisor is fairly easy. Some states, ( Eg. NY) now permit Certified Financial Planners to be licensed as investment advisors under state law. Fed rules govern investment advisors who manage more than $25 million for clients.

[KJohnson]

"ERISA requires that a fiduciary who manages plan assets for a fee must be a registered investment advisor under fed or state law."

MBOZEK--I agree that you must be an investment advisor to be an investment manager and that a trustee or named fidicuary will not be provided any type of fiduciary "insulation" unless the person who is named to manage plan assets is an investment manager--but where do you get the requirement that any fiduciary who manages plan assets for a fee must be an investment advisor?.

I know for example, in certain multiemployer plans there are compensated trustees (who are neither employees of the union nor sponsoring employer) and they are not qualified investment advisors.