The National Association of Government Defined Contribution Administrators (NAGDCA) has announced a new guide highlighting fiduciary considerations when implementing brokerage windows into public sector defined contribution (DC) plans.
The “Self-Directed Brokerage in Retirement Plans: Fiduciary Considerations” for public sector DC retirement plans provides insights into the fiduciary aspects of incorporating a brokerage window, including understanding the role of the brokerage services provider, assessing fees and compensation structures, and implementing plan-specific investment parameters.
While the decision to offer a brokerage window may be a plan design decision, the brokerage services provider selected to provide the brokerage window is considered a service provider to the plan, notes the NAGDCA. As with any service provider to a plan, plan fiduciaries making the selection must act prudently and solely in the interest of the plan participants and beneficiaries, both in making the selection and in continuing such selection, adds Brianna Daisy, a product owner of Self-Directed Brokerage at Fidelity Investments, in a guide for the NAGDCA.
“Incorporating a brokerage window into a DC retirement plan enables participants to access an enhanced array of investment options. While this addition isn’t new—brokerage windows have been included in retirement plans for decades—incorporating one isn’t without essential fiduciary considerations,” said Matt Petersen, NAGDCA Executive Director. “Although the decision to offer a brokerage window is a matter of plan design, if incorporated into the plan document, there are fiduciary obligations involved in selecting a brokerage window services provider.”
NAGDCA is a professional association for plan administrators and services providers of government-sponsored defined contribution retirement plans, and provides education, information, and training in public plan administration.
The new guide may be accessed here.
The NAGDCA Fees Guide, which provides an overview of public sector retirement plan fee types and structures, may be accessed here.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
