Why would A Plan Fiduciary want to offer Self-Directed accounts?
The Plan Fiduciary seemingly has no obligation to identify three investment alternatives that satisfy the "broad range" requirement of the Regulation. In the Final Regulation, the DOL gives an example of a complying 404(c) plan in which only one broadly diversified equity fund has been identified as an investment alternative in which participants can invest along with " any other asset administratively feasible for the plan to hold ."
By offering only self-directed accounts, the Plan Fiduciary does not have the liability to identify three designated investment alternatives nor to monitor their ongoing performance.
Participant-directed investment programs necessarily must limit the available investment alternatives to a restricted list, precluding the opportunity for more sophisticated investment strategies that would focus in on individual securities.
Many participants view the ability to self-direct their accounts as a real opportunity to maximize their investment returns in an effort to save for their retirement.