It’s All About (Fiduciary) Processes

Woomer, senior vice president of institutional and retirement plan services at Fort Pitt Capital Group in Pittsburgh, tells PLANSPONSOR, “Clearly I think the highest risk for plan sponsors is not having a fiduciary process in place. If plan sponsors are ever audited, regulators look at their processes more so than a specific result.”

According to Woomer, Fort Pitt Capital found that both internal and external clients had no fiduciary processes in place either because they were dealing with advisers who were not experienced in retirement plans or advisers who were predominantly investment experts. “Plan sponsors need advisers focused on the fiduciary responsibilities of plan sponsors,” he says.

The first thing Woomer does is give plan sponsors’ investment committee members the book “Best Practices for Investment Committees,” by Rocco DiBruno, managing director at Thornburg Investment Management. “I kind of make it seem it’s a requirement for being on the committee,” he says. Fort Pitt provides a full training session with committees, defining roles and responsibilities to which committee members must adhere. One important committee responsibility, Woomer points out, is to simply be there. “I stress that they have to come to meetings,” he says.

Fort Pitt then helps the committee get fiduciary procedures in place. Woomer says the company uses a fiduciary checklist that covers fiduciary governance, the investment process and investment policy statement (IPS), and other requirements such as fidelity bonding. “The newest hot button is fee policy statements, and we are doing those for clients,” he says. “It helps plan sponsors understand all the fees the plan is being charged and, if they have any extra revenue, where it is being allocated.”

Fort Pitt also helps clients create a fiduciary binder, which includes minutes of committee meetings and documentation about decisions that are made. “The newest thing we’re doing is building out everything electronically. Plan documents, meeting minutes, the whole fiduciary file, will be stored electronically in a customized file for the client in case an issue comes up,” Woomer adds. All the best practices Woomer mentioned and more will be discussed in a fiduciary seminar the firm will host, with speaker Brad Campbell from Drinker Biddle & Reath, he says.

Fort Pitt Capital Group was a $1.7 billion, individual wealth management adviser, but the firm kept getting questions from clients who were business owners needing help with their retirement plans, so it saw a need to bring someone in to address the retirement plan business, Woomer explains. He was hired in May. “We are a fee-based registered investment adviser [RIA] and a co-fiduciary with clients under Employee Retirement Income Security Act [ERISA] Section 3(21),” he says. “It is comforting for clients to know they have a partner with [their] and their participants’ best interests in mind.”

Fort Pitt may also be an ERISA Section 3(38) investment manager for a client—the company has built custom age-based and risk-based portfolios for clients—and provides individual investment advice to participants, Woomer notes. He says he has been struck by the fact that some plan sponsors are picking both a fiduciary adviser and an investment adviser, so they have two advisers; Fort Pitt can do both.

Woomer observes that the government seems particularly focused on retirement plan participant outcomes in recent rules. “Having a fiduciary process in place that will keep you out of trouble is the most important thing,” he says. “If the plan sponsor is engaged in using a fiduciary process, it will result in providing what participants need for successful outcomes.”