Certified Plan Sponsor Professional (CPSP) Practice Exam

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What are three key functions of an ERISA fiduciary?

  1. Assessing customer satisfaction, managing investments, monitoring economic trends.

  2. Prudently selecting service providers, diversifying assets, ensuring timely contributions.

  3. Developing marketing strategies, increasing participant engagement, evaluating insurance needs.

  4. Conducting surveys, reducing fees, and adjusting employer contributions.

The correct answer is: Prudently selecting service providers, diversifying assets, ensuring timely contributions.

The selection of prudently selecting service providers, diversifying assets, and ensuring timely contributions as key functions of an ERISA fiduciary is fundamentally aligned with the responsibilities that fiduciaries must uphold under the Employee Retirement Income Security Act (ERISA). Prudently selecting service providers involves conducting thorough due diligence to ensure that the selected providers are capable and qualified to offer the necessary services in a manner that aligns with the best interests of the plan participants. This process is crucial because the fiduciary must ensure that the services, whether they are for investment management, recordkeeping, or administrative support, meet the standards expected under ERISA. Diversifying assets is equally important as it serves to minimize risk and protect the retirement plan's assets from market volatility. A well-diversified portfolio aims to prevent overexposure to any single investment or asset class, which could jeopardize the overall financial security of plan beneficiaries. Ensuring timely contributions is another essential fiduciary function. ERISA places a significant emphasis on the importance of making contributions to participant accounts in a timely manner, as delays could impact the growth of retirement savings. Timely contributions are critical for employees' long-term retirement planning and financial health. In contrast, other options listed pertain to activities that do not

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