Certified Plan Sponsor Professional (CPSP) Practice Exam

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What is one reason why a fiduciary might not want to act alone in investment decisions?

The complexity of investments
To increase personal responsibility
To reduce costs
To enhance market visibility

The correct answer is: The complexity of investments

A fiduciary might prefer not to act alone in investment decisions primarily due to the complexity of investments. Investment choices often involve intricate analyses, a deep understanding of market trends, and awareness of various asset classes and their associated risks. By collaborating with other fiduciaries, financial advisors, or investment committees, a fiduciary can benefit from a wider range of expertise and opinions, which can lead to better-informed decisions. This collaboration helps mitigate risks associated with investment decisions, as multiple perspectives can highlight potential pitfalls or opportunities that an individual fiduciary might overlook. The complexity of today’s financial instruments and market dynamics makes it essential for fiduciaries to ensure they are fully informed and supported by a knowledgeable team to fulfill their obligations effectively and prudently.