It’s been said that the DOL and courts take the position that “if it wasn’t documented, it didn’t happen.”
In the case of ERISA, the best defense for retirement committees is always a strong offense, which means taking a proactive approach to implementing a comprehensive fiduciary governance process.
One of the cornerstone practices to demonstrate that the retirement committee has made prudent decisions as required by ERISA is to take official minutes at each meeting.
Here are three key benefits of meeting minutes:
- Your committee has a structured format for documenting your decision-making process in a concise and well-organized way.
- Your committee has a method to review and audit historical decisions and outcomes over time, which is beneficial for existing and new committee members.
- Your committee possesses an official record that can support the facts surrounding your decision-making process in a court of law.
While meeting minutes are a valuable tool to document your fiduciary process, it’s also important to draft minutes in a way that is beneficial and not detrimental, especially in a court of law.
Drinker Biddle, one of the country’s leading ERISA firms, outlined the following list of “Do’s and Do Not’s” as part of its “Benefits & Breakfast Roundtable Series” in 2017:
DOs
- DO succinctly document the factors considered and key reasons for each decision
- DO emphasize your adherence to other policies and procedures
- DO incorporate reports and expert advice relied upon
- DO maintain formality as to actual votes taken
- DO draft and finalize your minutes soon after the meeting, utilizing a consistent format
DO NOTs
- DO NOT include excessive detail about “who said what” or elaborate about internal discussions or dissents
- DO NOT focus on past problems or “fears”
- DO NOT leave issues “open” without any resolution
- DO NOT use derisive or alarmist language
- DO NOT commingle discussions about fiduciary matters with non-fiduciary or company matters
Consistently taking minutes at every meeting is one of those things that is simple but not easy. Although not intentional, retirement committees often fail to take minutes for any one of the following reasons:
- The company actually doesn’t have a formal retirement committee and so no meetings take place
- There is “technically” a retirement committee, but it meets on an inconsistent basis and when it does meet there is no clearly defined structure or format
- The retirement committee doesn’t realize it should be taking minutes, and none of its service providers have recommended it (which generally means they are not working with specialists or the right partners)
- No one on the retirement committee or with one of the service providers has been assigned the responsibility
The bad news is that a failure to take minutes is evidence of a poorly constructed fiduciary governance process and can lead to bad outcomes in the event of ERISA litigation which is on the rise. However, like most things in life, it’s something that can be easily fixed with the right combination of focus and discipline.
At Greenspring Advisors, we create the initial draft of meeting minutes for our clients as part of our client service process, which is then reviewed and approved by the committee. If your advisor isn’t doing the same thing for your retirement committee, you should ask them why. And if you’d like to learn more about how we help companies create and follow a comprehensive fiduciary governance process, let us know.
Josh Itzoe is a founder of Greenspring Advisors and leads the firm’s Institutional Client Group. He specializes in developing and managing corporate retirement plans by providing independent advice on fiduciary oversight, investment due diligence, fee-benchmarking, plan design and vendor management. He is also the author of one of the retirement industry’s most well-known books on fiduciary responsibility for defined contribution plans, Fixing the 401(k): What Fiduciaries Must Know (And Do) To Help Employees Retire Successfully.
Josh Itzoe, CFP®, AIF® is the Founder & CEO of FiduciaryWor(k)s, a tech platform that empowers advisors with modern tech to diagnose, prescribe and improve Fiduciary Wellness.
