Certified Plan Sponsor Professional (CPSP) Practice Exam

What is the primary role of a fiduciary in terms of plan assets?

1. To market the plan to employees.

2. To ensure the responsible investment and management of assets.

3. To maximize the number of investment options.

4. To oversee participant communication only.

The correct answer is: To ensure the responsible investment and management of assets.

The primary role of a fiduciary in terms of plan assets is to ensure the responsible investment and management of those assets. This responsibility is grounded in the fiduciary duty, which mandates that fiduciaries act with prudence and loyalty towards the beneficiaries of the plan. Fiduciaries must prioritize the best interests of the plan participants and beneficiaries, which includes making informed decisions about how the assets are invested and managed. This involves selecting appropriate investment options, monitoring investment performance, and ensuring that all actions comply with relevant laws and regulations, such as the Employee Retirement Income Security Act (ERISA). By fulfilling these responsibilities, fiduciaries help to protect the financial security and retirement readiness of participants. While marketing the plan, maximizing investment options, and overseeing participant communication are important components of plan management, they do not capture the essence of fiduciary responsibility as directly as the stewardship of plan assets does. The core purpose of a fiduciary is to safeguard the investments and ensure they are managed in a manner that aligns with the interests of the participants, which is why ensuring the responsible investment and management of assets is the definitive role of a fiduciary.