Can you achieve 404(c) compliance without the help of an Investment Manager?
Offering a 404(c) compliant set of investment options for participant direction is substantially similar to establishing the investment strategy and asset allocation for a pooled portfolio--with one additional significant complicating factor. A 404(c) compliant set of investment options is not one portfolio, but rather an "interactive" set of investment options that will be used by many participants to create many different investment strategies covering the risk/return spectrum.
2550.404c requires the offering of a broad range of investment options that gives the participant the opportunity to "achieve a portfolio with aggregate risk and return characteristics at any point within the range normally appropriate for the participant". A plan fiduciary would certainly be wise to seek further statutory relief under 405(d)-1 for the investment decisions involved in the construction of the 404(c) compliant investment menu by appointing a qualified investment manager or advisor to undertake this task.
The Plan Fiduciary decides if the Plan will offer the opportunity for a Participant or Beneficiary to direct the investments within their account. The Participant must decide whether to exercise that privilege. He cannot be forced to direct the assets within his account.
Thus, the Plan Fiduciary must stand ready to manage those plan assets of participants and beneficiaries who decline to direct their own investments. The Plan Fiduciary must manage these assets in the same manner in which he would manage all of the Plan assets if participant-direction were not permitted.
A Plan Fiduciary is encouraged to retain the services of an investment manager for management of Plan assets.
See the section of this website under MISCONCEPTIONS > ABOUT 404(C) > DEFAULT OPTIONS.