The Weight of Fiduciary Responsibility for Helping Retirement Plans Provide the Best Financial Outcomes for their Participants
Ironwood Retirement Plan Consultants • September 16, 2025
In today’s increasingly litigious and tightly regulated retirement plan landscape, there are few roles in financial services under as much scrutiny as that of a fiduciary retirement plan advisor. Advisors must rigorously comply with fiduciary standards that courts describe as the “highest under the law” – and are well served to clearly document their fiduciary processes.
As the industry continues to evolve, three critical challenges are shaping the future of retirement plan advising.
Key Challenges Facing Retirement Plan Advisors
- Rigorous Fiduciary Standards
The Employee Retirement Income Security Act of 1974 (ERISA) statute, as interpreted by the Supreme Court, requires that all fiduciary investment recommendations and decisions be made for the sole purpose of maximizing risk adjusted financial returns. Plan advisors should implement a rigorous process to ensure that all investment recommendations and decisions meet this standard. While this standard cannot be changed by executive or agency action, plan advisors should be well-versed in the latest regulatory developments and litigation trends. Increasingly, clients view receiving updates in these areas as a non-negotiable part of the advisor’s role. - Increased Litigation Risks
ERISA litigation challenging fiduciary decisions for 401(k) and other defined contribution plans have exploded over the last 15 years, which bring into focus the importance of rigorous compliance with the ERISA fiduciary standards. But litigation risk doesn’t change the standard governing advisor recommendations or decisions. Plan investment recommendations or decisions should be made for the sole purpose of maximizing risk adjusted returns, regardless of litigation scrutiny. The best ways to mitigate litigation risk is to scrupulously follow this ERISA investment standard and document a robust process used to arrive at plan investment decisions. - Time-Consuming Documentation
Documenting a fiduciary process can be time consuming – but also essential given the scrutiny plan fiduciaries face. A key form of documentation can come from minutes of fiduciary investment committee meetings. Minutes may provide the clearest illustration of a robust process to reach fiduciary decisions, including ones related to investment selection methodologies, fee benchmarking, ongoing monitoring, and potential investment replacements. The importance of documentation in a modern retirement plan, and the burdens in creating it, underscore the benefits of tools and processes that streamline documentation efforts without sacrificing quality.
How Advisors Can Adapt and Stay Compliant
How can advisors stay ahead of the curve and keep providing their clients with outstanding value in light of the substantial obligations of retirement plan advising? Adopting effective compliance procedures, embracing technology, and proactively informing clients of their fiduciary duties are all essential to success.
Leverage Technology for Document Management
It is becoming increasingly important to invest in a centralized, secure document management solution to document robust fiduciary processes used to make investment recommendations or decisions that satisfy ERISA and other legal requirements. Advisors may manage, preserve, and arrange important fiduciary documents with the help of solutions like RPAG's Fiduciary Briefcase. This tool can enhance fiduciary processes, and, if responding to audits, legal threats, or regulatory reviews, it can help quickly access and submit responsive records. In addition to increasing productivity, centralized document storage gives employer plan fiduciary clients more assurance by showcasing a dedication to transparency and readiness.
Educate Employer Plan Fiduciary Clients on Their Responsibilities
Most employer plan fiduciaries require training to understand the extent of their fiduciary duties – training that, in of itself, can be evidence of a robust fiduciary process. Advisors have a powerful opportunity to add value by offering ongoing fiduciary education and training to their employer plan fiduciary clients. When employer plan fiduciaries understand their obligations and how to meet them, they are more likely to appreciate the advisor’s expertise and partnership. More importantly, an educated employer plan fiduciary is a critical ally in maintaining a culture of fiduciary excellence.
Building a Future-Proof Advisory Practice
The role of a retirement plan advisor is both complex – and critical for helping secure the financial retirement security of plan participants and beneficiaries. Doing so demands a disciplined, proactive approach. Advisors who embrace technology, prioritize documentation, automate compliance workflows, and invest in client education can have a leg up in having the tools to be best positioned to thrive.
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As rising interest rates have reshaped pension funding dynamics post-COVID, many corporate defined benefit (DB) plans are now experiencing significant surpluses. According to actuarial firm Milliman, the 100 largest corporate DB plans, in aggregate, held an estimated $62 billion in excess assets as of December 2024. Under existing tax law, defined contribution (DC) plan sponsors have limited options for using these surplus funds because, as a rule, accessing the excess assets requires terminating the plan. However, two new proposals from the American Benefits Council could offer an alternative path forward. In letters sent to the chairs of the House Committee on Ways and Means and the Senate Committee on Finance, the council outlined legislative recommendations that would allow employers to repurpose pension surpluses without requiring them to terminate their DB plans. Unlocking Surplus Dollars from DB to DC Plans The first proposal would permit companies to transfer excess assets from an overfunded DB plan into a DC plan, such as a 401(k), for the benefit of current employees. This would enable sponsors to keep the pension plan intact, while still making use of the surplus to help enhance employee retirement security in other ways. Support for Active Employee Health Coverage The second proposal to the committees focuses on retiree health accounts. Under its recommendations, employers would be permitted to redirect the surplus assets in overfunded DB accounts toward funding health care benefits for their current, active employees. Both proposals are seeking to modernize the rules governing surplus DB asset use while preserving the integrity of existing defined benefit plans. They would also help prevent what some policymakers might view as a “double dip” — repurposing surplus dollars into new benefit obligations while claiming a second tax deduction. The proposed changes would limit any future deductions on amounts already receiving favorable tax treatment, mitigating potential revenue loss to the federal government. Implications for Plan Sponsors If enacted, both of these provisions would provide sponsors with greater flexibility to optimize benefit offerings without dismantling well-funded pension plans. For many companies, this could mean retaining their DB plan structure while giving them more options to address their evolving workforce needs. The proposals are in early stages and would require legislative action if they were to be enacted into law. Still, they reflect growing interest in revisiting pension policy to reflect today’s funding realities as well as workforce and plan sponsor needs. Source: https://www.americanbenefitscouncil.org/pub/?id=ed02fe69-b2ef-6632-a9f6-84a8a70349c9
Nearly a quarter of all Gen Z employees aren’t enrolled in a company retirement plan, according to BenefitsPro. That’s three times the rate of millennials, Gen X, and Boomers. In addition, 12% of Gen Zers don’t take advantage of any workplace benefits at all, twice the rate of other generations. Here are ways plan sponsors can help prevent their youngest workers from experiencing financial FOMO by sitting on the sidelines of their employer-sponsored retirement plan. Tailor plan design. Plan sponsors may improve engagement by offering immediate eligibility for participation and matching, automatically enrolling new hires at modest deferral rates with auto-escalation features, and linking student loan payments to employer contributions. Emergency savings features and Roth options may also resonate with this cohort, helping them manage both short- and long-term needs. Use short-form videos. Provide education about the benefits of 401(k) participation via TikTok-style videos on internal platforms or social channels. This generation may prefer fast, engaging content over longer-form articles. Highlight flexibility over distant retirement dreams. Frame contributions as a step toward financial freedom. This could mean taking career breaks or more travel experiences — not just retiring at 65. When young employees can see how retirement savings fuel a lifestyle they care about, they’re more likely to start now. Make enrollment feel like an app. Use mobile-first, intuitive interfaces for benefits enrollment. Gen Z expects user experiences to feel more like Apple or Amazon, not clunky HR portals. Reduce friction in the user digital experience. Plan sponsors should work with providers who offer enrollment options that mirror the apps Gen Z uses daily. Offer purpose-driven messaging. Emphasize how financial wellness supports independence and the ability to enjoy a greater breadth of life experiences, or lets them contribute to causes that matter to them. This generation often views money as a means to impact, not just for the purpose of accumulation. Purpose-oriented messaging is likely to resonate more with this cohort. Integrate with onboarding gamification. Build benefits participation into early-stage onboarding with milestone achievements or rewards. Gen Z may respond well to gamified processes. Badges, or tiered goals can nudge participation. Even something as simple as a “first contribution” celebration badge can provide a motivational spark. As Gen Z enters the workforce, it does so during a time of economic uncertainty, high student debt, and rising housing costs. They face delayed financial milestones and a different perception of long-term planning. Many also began their careers during the COVID-19 pandemic, shaping a worldview that values flexibility, purpose, and digital fluency, though they still appreciate human guidance. Helping Gen Z build financial resilience today and setting them up for a more secure financial future tomorrow requires the willingness to rethink how retirement planning is communicated and delivered — because the habits they form now will shape their future and the retirement landscape for decades to come. Sources: https://fortune.com/2025/05/18/gen-z-missing-out-free-money-401k-match-company-policy-retirement-savings https://www.benefitspro.com/2025/03/03/23-of-gen-zers-arent-enrolled-in-the-company-401k-3-ways-to-engage-this-younger-generation/
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