As this consolidation has occurred on the advisor side, Advisor firms are actively positioning OCIO (Outsourced Chief Investment Officers), ERISA 3(38) or Discretionary Asset Management services to Plan Sponsors. The three terms are used interchangeable and relate to hiring an advisor/consultant to take fiduciary responsibility from the Retirement Committee for all investment related decisions including hiring and firing investment managers/funds in your retirement plan.
Generally, Committees are utilizing this service due to:
Plan Sponsors considering the implementation of this type of OCIO/ERISA 3(38) model should be prepared to conduct extensive due diligence on potential partners since there are significant differences in service models.
A small sample of questions that need to be addressed in detail include:
It is impossible for Plan Sponsors to eliminate all fiduciary liability and need to be prepared to undertake periodic due diligence of these services.