Certified Plan Sponsor Professional (CPSP) Practice Exam

What role is responsible for selecting and monitoring investment options for retirement plans?

1. Plan Administrator

2. Financial Advisor

3. Plan Sponsor

4. Compliance Officer

The correct answer is: Financial Advisor

The role responsible for selecting and monitoring investment options for retirement plans is typically that of the Financial Advisor. This individual provides expertise in financial planning and investment strategies, guiding plan sponsors in choosing suitable investment options that align with the plan's goals and the best interests of the participants. A Financial Advisor conducts research on different funds and investment vehicles, analyzes performance data, and remains updated on market trends. They help ensure that the investment options offered in the plan are diverse and appropriate for the risk tolerance and investment horizons of the plan participants. By continuously monitoring these investments, a Financial Advisor can make recommendations for adjustments as needed to optimize the plan's performance. In the context of retirement plans, while other roles like the Plan Administrator and the Plan Sponsor have important functions—such as overall plan management and compliance with regulations—the direct responsibility for investment selection and monitoring usually lies with the Financial Advisor. Compliance Officers focus on ensuring legal and regulatory standards are met but do not typically select or manage investments directly.