AI and The Duty of Prudence?


One way plan sponsors demonstrate the duty of prudence under the the standards of ERISA law is to regularly benchmark the 401k’s service providers and fees. This can be time consuming, but artificial intelligence is starting to make benchmarking a whole lot easier.

Benchmarking the 401k

As a plan sponsor, you are a fiduciary: ERISA law obligates you to be more careful with the retirement assets of your employees than you are with your own money. This applies not just to assessing the appropriateness of available investment options, but also selecting—and periodically reviewing plan services and fees. Failure to benchmark services and fees against industry standards is often an issue behind ERISA violations and lawsuits.

Importantly, the National Association of Plan Advisors reports that artificial intelligence tools are becoming available and making it easier to “uncover valuable, detailed…comparisons of key plan data”:

BenchMine, a “comparative analytics” firm, released its second year of searchable performance data for U.S. retirement plans….The free and open access platform has included 58,912 401(k) plans, using the first major data release on CY 2022 from the U.S. Department of Labor.

 “BenchMine enables users to analyze, compare, and discover plans and performance outcomes to an unprecedented level,” the company said. “No specialized knowledge is required—anyone can use BenchMine to evaluate plans across industry, geographic region, size, or other points of comparison … .BenchMine uncovers noteworthy positive insights for individual plans or groups.

 Making Informed Decisions

Plan sponsors have the ultimate responsibility for making informed decisions about the company 401k and its critical to understand the fiduciary liabilities. It’s best not to shoulder the risks alone. At Colonial, a whole year of Fiduciary Liability coverage is less than a few dollars a day, and we even include Cyber Liability coverage to protect the business and retirement plan.

Armed with Colonial’s liability coverage, if you face claims of alleged or actual breaches of duty in connection with the employee retirement plan, you’ll be protected with defense costs and penalty limits up to $1,000,000. Protect yourself and your business, for a few dollars a day, now:

Obtain Fiduciary With Cyber Liability Insurance Right Here

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