Statutory relief for retaining the services of an Investment Manager
The Prudent Man Rule promulgated under ERISA Section 404(a)(1) sets a high standard for the performance of the Plan fiduciary. ERISA statutes encourages the delegation of investment oversight by providing an avenue to statutory relief in Section 405(d)(1):
If an investment manager or managers have been appointed under section 402(c)(3)*, then, notwithstanding subsections (a)(2) and (3) and subsection (b), no trustee shall be liable for the acts or omissions of such investment manager or managers, or be under an obligation to invest or otherwise manage any assets of the plan which is subject to the management of such investment manager.
*ERISA Section 402(c)(3) expressly authorizes named fiduciaries to appoint investment manager(s) for the management of any assets of a Plan.
Congress anticipated that few Plan Fiduciaries would possess the expertise ERISA would require of them to manage Plan assets.
The high standard set by ERISA for fiduciaries to properly manage plan assets along with the express conditions established for delegating this responsibility amount to very strong encouragement for plan trustees to seek the services of properly qualified investment managers and advisors as appropriate given the needs of the plan, its participants and its beneficiaries.