Most U.S. Companies Risk Fiduciary Liability with Retirement Plans

Wednesday, August 15, 2007 General News
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ATLANTA, Aug. 14 One of the largest sources of class-action lawsuits today is fiduciary liability, and, according to Fiduciary RiskManagement, LLC, this type of litigation results from companies fundamentallymisinterpreting their fiduciary duties under the Employee Retirement IncomeSecurity Act (ERISA).

To address this immense level of unnecessary risk that plagues businessesand often leaves employees short of retirement goals, Habif, Arogeti & Wynne,LLP, one of the country's top-100 CPA firms, has introduced a new solution toaddress these issues through an independent subsidiary, Fiduciary RiskManagement, LLC (FRM). FRM partners with large employers to effectivelyaddress the needs of employees while appropriately managing retirement plansto reduce corporate risk.

"Most companies are convinced that they have completely complied with thelaw and are unaware of potential danger," said Jessica R. Flores, managingdirector, Fiduciary Risk Management. "This is especially the case for Fortune1000 companies where large assets, combined with unknown noncompliance, makethem perfect targets for class-action lawsuits."

Last year, there were approximately 10,000 ERISA-related lawsuits,representing 59 percent of total labor suits(1). This comes as no surpriseconsidering the staggering statistics regarding retirement plans:

FRM serves as an independent retirement fiduciary advisor that focuses 100percent of its effort on providing comprehensive guidance to companies,placing a premium value on what matters most: meeting the needs of planparticipants. This service comes at a crucial time in today's economy wheremore than 50 percent of Americans are not on track to meet their retirementneeds(5) -- and this number is steadily increasing.

"Most companies expect to hear about problems or issues from theirinvestment consultants or plan service providers," Flores said. "However,their interests are quite different from those of the company's. Theseorganizations are first and foremost in the investment business, and they earnmoney from investment management fees and products the companies pay for. Thatmeans their primary focus is on investment performance, not retirement planfiduciary compliance."

Key features of the FRM solution include analysis of all aspects ofretirement plans to identify noncompliance issues; implementation of a"complete" fiduciary program; education programs aimed at providing employeeswith the necessary information to make better investment decisions; definingat risk-groups among plan participants; development of results-drivenmeasurement tools to help ensure ongoing compliance; and support in the eventof any lawsuits against the company or its retirement plans. However, the mostnotable aspect of the relationship is that FRM does this as an independentplan fiduciary and takes on some of the liability burden placed on thecompany.

FRM retained the services of the pre-eminent ERISA law firm Reish,Luftman, Reicher & Cohen to help develop its program.

About Fiduciary Risk Management, LLC

Fiduciary Risk Management, LLC (FRM), is an independent co-fiduciary.FRM's mission is to protect the plan sponsor and provide effective educationto employees so they can make better decisions. FRM provides these servicesfor FORTUNE 1000 companies that are most exposed to significant fiduciary andreputation risk. FRM has no conflict of interest because it sells no productsand plans, nor does it align itself with any service provider. FRM is anindependent subsidiary of Habif, Arogeti & Wynne, LLP, one of the country'stop-100 CPA firms. Protecting clients from fiduciary liability by assistingthem with meeting their obligations is the only thing that FRM does. For moreinformation, visit

About Habif, Arogeti & Wynne, LLP

Habif, Arogeti & Wynne, LLP is the largest indepe

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