Take Control of Fiduciary Risk With the Right Support

JULY 1, 2025

Less than 50% of retirement plan sponsors are fully aware of their fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA).1 Investment oversight of retirement plans is a top priority for employers, and fiduciaries must understand their responsibilities and the associated risks. Employers with limited experience and awareness may increase litigation risk.

Under ERISA, a plan fiduciary:

  • Is any person who exercises discretionary authority or control over plan assets or administration, or gives investment advice
  • May be personally liable for losses and lost opportunity costs resulting from breaches of duty

Lack of Fiduciary Knowledge Can Be Costly

Despite not fully comprehending their fiduciary responsibilities and the related risks, some employers proceed with making decisions and changes that affect their retirement plan’s investments:2

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plan to implement, update or review their investment policy statement
27%.png

plan to evaluate or review their managed account services
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plan to add or remove specific asset categories

These employers can be exposed to millions of dollars in litigation risk. In fact, recent studies show insurance companies have paid more than $1 billion in settlements.3

ERISA litigation, particularly class action lawsuits, has increased significantly since 2015 due to excessive fee allegations and concerns about retirement plan investment performance. Notably, ERISA excessive fee class action litigation surged by 35% in 2024.4 Not exercising appropriate fiduciary oversight can have adverse financial impact on participants.

The U.S. Department of Labor’s (DOL’s) list of lawsuits reveals a range of fiduciary errors related to improper investment management and imprudent investment decisions. These errors cost retirement plans millions and reduce benefits for some plan participants.

Fiduciary Support That Fits

You don’t have to shoulder all the responsibility for investment selection or be an investment expert. USI Consulting Group (USICG) helps employers reduce their fiduciary liability by providing enhanced investment oversight and holistic plan governance through ERISA 3(38) or 3(21) service models. USICG offers customized, flexible fiduciary support depending on the employer’s level of involvement.

ERISA 3(38) Service Model

ERISA 3(21) Service Model

Investment decisions are made on your behalf by an ERISA 3(38) fiduciary — an investment manager who:

  • Has discretion and authority to
    manage the plan’s assets
  • Makes ALL selection, monitoring and replacement decisions

You review and approve investment recommendations made by an ERISA 3(21) fiduciary advisor who:

  • Recommends and monitors investments
  • Suggests investment alternatives
  • Advises the employer to follow fiduciary process

When selecting fiduciary support, consider whether:
  • You prefer to delegate responsibilities and the investment selection process to an investment manager
  • You are comfortable with the investment manager making and executing investment decisions on a fully discretionary basis
  • You prefer to be actively involved
    in managing the plan’s assets
  • You prefer to retain control of the investment selection process
  • You are comfortable making decisions based on the fiduciary advisor’s recommendations

 

Case Study: Move in the Right Direction With USICG Fiduciary Support

A moving and storage company in the Northeast selected USICG to provide an ERISA 3(38) service model solution, as the company’s retirement plan committee struggled to meet regularly and wrestled with high investment costs.

USICG uncovered deficiencies in the plan governance where the DOL could have levied potential penalties. The issues were corrected as USICG:

  • Moved the plan to a 3(38) fiduciary model, which reduced fiduciary liability associated with the investment menu from the plan sponsor to the investment manager
  • Transitioned from an all-mutual-fund lineup to a collective investment trust (CIT) lineup, reducing investment management expenses from 0.37% to 0.19%
  • Diversified the investment menu across new asset classes and streamlined the investment menu to meet the various levels of sophistication and risk tolerance of plan participants
  • Negotiated lower recordkeeping fees, moving from 0.46% down to 0.30%
  • Eliminated a bundled pricing model and moved to a more transparent fee schedule
  • Developed a comprehensive retirement plan education and communication strategy for employees

How USI Consulting Group Can Help

USICG helps employers better understand their fiduciary responsibilities and mitigate fiduciary risk. We provide clients with ongoing investment due diligence support, fiduciary training, plan operations and compliance oversight, periodic provider searches, and fee benchmarking and plan design consulting services, whether you select an ERISA 3(21) or 3(38) service model.

To learn more, please contact your USICG representative, visit our Contact Us page, or reach out to us at information@usicg.com.

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1 Pentegra Adviser Study, 2025
2 Callan Institute Defined Contribution Trends Survey, 2023
3 Euclid Specialty Whitepaper: Exposing Excessive Fee Litigation Against America's Defined Contribution Plans, 2020
4 PlanAdviser, 401(k) Excessive Fee Litigation Spiked to ‘Near Record Pace’ in ’24, 2025

This information is provided solely for educational purposes and is not to be construed as investment, legal or tax advice. Prior to acting on this information, we recommend that you seek independent advice specific to your situation from a qualified investment/legal/tax professional. | 1023.S1103.0085

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