Service Provider Selection: Tips & Traps for ERISA Fiduciaries

Western Pension & Benefits Council - Orange County Chapter

ERISA requires fiduciaries to act prudently when it comes to selecting and monitoring service providers. Prudence means having an objective process that considers relevant information to support well informed decisions. Fiduciaries often believe they have checked the box on prudence by conducting a request for proposal or some form of fee benchmarking. While these are important steps in the process, they don’t automatically validate decisions as prudent. This presentation will describe how to develop and implement a prudent process for service provider selection, including:

• Documenting the needs of the plan and its participants 
• Evaluating the nature and scope of services offered and conflicts of interest
• Background, experience and credentials of the service providers
• Confirming reasonableness of the: 1) terms of the arrangement; and 2) fees in light of value provided
• Tips for documenting the process and ongoing monitoring

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