Who arranges forthe fiduciary education of the plan sponsors? Do they know enoughof what they don't know to even seek this education? (Photo:Shutterstock)

Mark Twain never said not to put all your eggs in one basket. Infact, he said the opposite. In advising against “scattering yourmoney and your attention,” the famed wordsmith penned “Put all youreggs in the one basket and – watch that basket!”

It's the duty of the 401(k) plan sponsor to watch over the bestinterests of all the good eggs employed by the company. It's notjust a duty. It's a fiduciary duty. And that's a duty unfamiliar tomany first-time plan sponsors.

With all the education arranged by plan sponsors on behalf ofplan participants, who arranges for the fiduciary education of theplan sponsors? Do they know enough of what they don't know to evenseek this education? Or do they simply seek to inform themselves ofthe more popular topics while they ignore the most importantones?

Like elementary schoolers, 401(k) plan sponsors need to immersethemselves in fundamentals first (see “5 Critical Topics to Teach 401k Plan Sponsors:Fiduciary Education Curriculum (Part I),” FiduciaryNews.com,April 30, 2019).

If you try to run before you learn to walk, chances are greateryou'll fall. The same is true with the fiduciary education of plansponsors. It may be thrilling to explore the vast jungles ofinvestments and investing, but that's but a small corner of one'sfiduciary fiefdom. More important, the ABCs of dotting i's andcrossing t's, though comparatively less exciting, can spell thedifference between an unlucky break and a fiduciary breach.

Here's the problem. Most plan sponsors occupy the C-suite.They're “too busy” to take even 30 minutes out of their day for aquick lesson in “fiduciary.” In other words, fiduciary educationisn't high on their priority list (“We've got a firm to run,don'tcha know!”). In other, other words,

Plan sponsors need to accept the fact they possess no innateexpertise in the nature and scope of ERISA fiduciary duties. Theymay possess an innate expertise in their business, but corporateretirement plans aren't their business. Plan sponsors must betaught. They must actively participate in their own fiduciaryeducation.

It's been said the road to rehabilitation begins with therealization you have a problem, or at least a deficiency.

Decades ago, through the roaring nineties, it was clear 401(k)plan sponsors weren't as sensitive to their fiduciary liability asthey might have been. The decade's doldrum at the outset of the newmillennium exposed their fiduciary underbelly, and a series ofhigh-profile court cases confirmed that liability wasn'ttheoretical. It was real. This heightened their notion of their ownfiduciary liability.

In the past few years, however, as tort attorneys have finishedpicking the low hanging fruit of easy cases and plan sponsors builtmore effective protections, we may see the dawn of a new era ofplan sponsor complacency.

This is disheartening.

And it wouldn't be an issue if only plan sponsors remaincommitted to taking periodic booster shots of fiduciaryeducation.

READ MORE:

A 3-word fiduciary rule — Carosa

The 'Fiduciary Rule' versus the 'Rule of Fiduciary'— Carosa

Do you have the 'knows' to be a fiduciary? —Carosa