Westminster Consulting Brochure Defined Contribution & Defined Benefit | Page 17

The Biggest Myth for Investment Consultants
By Gabriel Potter AIFA

®

Senior Investment Research Associate at Westminster Consulting

The Bad News
Many of our readers are fiduciary trustees for large pools of money:
pension funds, charitable foundations, employee welfare & retirement
plans, and so on. You, the fiduciaries, should be applauded for
adopting this burden, for it is often an under appreciated duty. As
fiduciaries, you are responsible for a great deal and the scope of your
responsibilities is ever increasing.
At Westminster Consulting, we sometimes are bearers of bad news. It
would be easier to tell investment committees all the ways that their
attention wasn’t required and how much more leisure time everyone
gets. In reality, we are obligated to explain where your fiduciary duties
lie.
Here’s where the bad news come in. We have spoken with trustees
working for a retirement plan or charity that have, in an effort to
offload fiduciary responsibility, hired a fiduciary consultant to help
manage their plan. Herein lays the Myth:
The Myth: “Our trustees hired an investment consultant with fiduciary
status. Our consultant has no conflict of interest because he is a
fiduciary! So, our plan is totally covered and we, the trustees, we are
no longer responsible for the plan.”
The Facts: This is wrong in two important ways.
Once you hire a consultant, even one that adopts a fiduciary standard,
plan fiduciaries cannot completely offload their fiduciary responsibility.
They may share responsibility with a consultant, but they cannot
offload it completely.
Most importantly, the plan fiduciaries will always be responsible
for overseeing the consultant. Why is this difficult? The sad
reality is that some