June 28, 2012
--- An SEI quick poll of 50 corporate
defined benefit (DB) plan sponsors found 26% use a 3(38) fiduciary
Two-thirds (65%) of respondents currently use a 3(21) investment adviser, and 9% do not use an investment adviser at all.
Of the poll participants who said they are not currently
using a fiduciary manager, 29% said they would likely consider a change
to this model within the next five years, potentially more than doubling
the use of an outsourced fiduciary manager model by corporate pension
plan sponsors by 2017.
According to the Employee Retirement Income Security Act
(ERISA), an investment provider who assumes discretion is considered to
be a 3(38) fiduciary manager. Other industry names for this model
include investment outsourcing provider and outsourced chief investment
officer (OCIO). In contrast, an investment provider who delivers advice
only is considered to be an ERISA 3(21) investment adviser. An example
of this model would be a traditional investment consultant.
Poll participants currently using a 3(38) fiduciary
manager said this model allows them to focus more on strategic issues,
such as aligning investment decisions with corporate financial goals,
and delegate tactical decisions, such as improving portfolio