Certified Plan Sponsor Professional (CPSP) Practice Exam

True or False: Appointing an ERISA 3(38) investment manager relieves a plan fiduciary of all fiduciary duties.

1. True

2. False

3. It transfers partial liability

4. Only for specific decisions

The correct answer is: False

Appointing an ERISA 3(38) investment manager does not relieve a plan fiduciary of all fiduciary duties; instead, it alters the fiduciary landscape by delegating certain responsibilities. Under ERISA, a 3(38) investment manager is granted the authority to make investment decisions on behalf of the plan, which allows plan fiduciaries to shift the responsibility for selecting and monitoring investments to the investment manager. However, while the appointment of a 3(38) manager does relieve the plan fiduciaries from the duty to monitor the investments chosen by the manager, it does not eliminate all fiduciary responsibilities. Fiduciaries remain responsible for initially selecting and appointing a competent 3(38) investment manager, as well as continuing to monitor the manager's activities to ensure that they are acting in the best interest of the plan participants. This includes ensuring that the manager is qualified and adheres to the terms of the delegation. Therefore, the statement is false because fiduciaries still retain certain responsibilities even after appointing a 3(38) manager, particularly around oversight and proper selection of that manager.