Certified Plan Sponsor Professional (CPSP) Practice Exam

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Prepare for the Certified Plan Sponsor Professional Exam. Use flashcards and multiple choice questions with full explanations. Achieve exam success!

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What is one key responsibility of a plan fiduciary regarding service providers?

To negotiate lower fees
To monitor performance and services
To replace service providers regularly
To manage investment returns

The correct answer is: To monitor performance and services

One key responsibility of a plan fiduciary regarding service providers is to monitor performance and services. This responsibility is essential because fiduciaries are obliged to act in the best interest of plan participants and beneficiaries. This involves regularly assessing the effectiveness and reliability of the services provided by third-party vendors, such as record-keepers, investment managers, and other service providers. Monitoring includes evaluating whether the services being provided meet the needs of the plan and its participants, looking at aspects such as the quality of service, compliance with regulations, and the performance of any investments managed by the provider. Regular monitoring helps ensure that the plan is receiving value for the fees paid and can initiate timely changes if a provider does not meet the expected standards or objectives. This is a proactive step to fulfill the fiduciary duty of prudence, which requires ongoing oversight to safeguard the interests of the plan's participants and beneficiaries.