Tending the Flock - Index Funds Advisors

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Tending the Flock: Shepherding Catholic Retirement Plans In our work, we have found that starting with a discussion of plan options is like trying to install doors and windows into a house before the foundation is set and the walls have been framed. The best place to start is with the fundamental question: “Why we are here?” Another foundational element is the committee’s understanding of the fiduciary mantle they have taken up as plan stewards. As described by fi360, a leading fiduciary training and resources organization in the U.S., stewards stand at the top of the fiduciary pecking order. They are generally named as fiduciaries in trust or pension plan documents and essentially hold all fiduciary responsibilities unless they formally take steps to delegate some of those responsibilities to other prudent experts, such as advisors or managers. What is a fiduciary? A fiduciary duty is a legal duty to act solely in another party’s interests. Parties owing this duty are called fiduciaries. The individuals to whom they owe a duty are called principals. Fiduciaries may not profit from their relationship with their principals unless they have the principals’ express informed consent. They also have a duty to avoid any conflicts of interest between themselves and their principals or between their principals and the fiduciaries’ other clients. A fiduciary duty is the strictest duty of care recognized by the U.S. legal system. Examples of fiduciary relationships include those between a 3(38) Investment Managers for ERISA 1 401k Plans, Registered Investment Advisors and their clients, lawyers and their client, guardians and their wards, and directors and their shareholders. 1 Please see the definition of ERISA in the Glossary. 7
Tending the Flock: Shepherding Catholic Retirement Plans ERISA defines a fiduciary as anyone who exercises discretionary authority or control over a plan’s management or assets, including anyone who provides investment advice to the plan. Of course, Catholic organizations are formally exempt from complying with ERISA when electing Church plan status – but this does not equate to a lack of fiduciary duties. There are many benefits to defining your committee’s fiduciary role and aligning your organization’s retirement plans according to regulations outlined by ERISA: •The levels of “care, skill, prudence, and diligence” required by ERISA already largely apply to non-ERISA plans. Many of the state laws regulating plans either mimic ERISA provisions, reference them directly, or draw heavily upon them. • Learning the best practices and processes that come from the deep and rich experience of ERISA plans will lead to a strong foundation upon which successful retirement plans can be built, thus allowing organizations to move forward in a positive and successful way. • Rod Crane, Senior Director of TIAA-CREF’s Government and Religious Markets, explains the reason for adopting ERISA standards this way: “The worst risk from any perspective is a failed plan – a failed plan that doesn’t get participants to an adequate secure retirement, a plan that does not meet the mission objectives of the church, a plan that does not meet the employer objectives of the church as an employer for attracting and retaining and having the timely retirement of older workers from the work force. Failed plans are much worse than taking on a little bit of manageable fiduciary risk.” 2 2 Rod Crane’s complete comments can be viewed at http://investingforcatholics.com/films/ rod-crane-tiaa-cref.aspx 8
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Page 5 and 6: This book is dedicated to our famil
Page 7 and 8: Acknowledgements We would like to e
Page 9 and 10: Table of Contents Foreword . . . .
Page 11 and 12: Foreword Until now, retirement plan
Page 13 and 14: About Mike Mike Patterson, J.D. LL.
Page 15 and 16: Accolades In this age of hidden and
Page 17 and 18: About Mary Mary Brunson is the Vice
Page 19 and 20: About Judy Judy Baba is the liaison
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Tending the Flock - Index Funds Advisors

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