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ERISA 3(38) vs ERISA 3(21)

What’s the Difference?

The ERISA 3(38) Fiduciary serves as the Investment Manager for your plan, assuming full discretion over investment decisions, and the ERISA 3(21) Fiduciary acts as the Investment Advisor for your plan, providing guidance while you retain final decision-making authority.

  • An ERISA 3(21) Fiduciary’s responsibility is to provide investment advice, and the final decision regarding the investment selection is the Plan Sponsor’s responsibility.
  • An ERISA 3(21) Fiduciary is a good option for Plan Sponsors who are okay with sharing fiduciary responsibilities.
  • An ERISA 3(21) Fiduciary will typically draft an Investment Policy Statement. Based on the IPS, investment advisor will monitor investments and recommend changes if needed.
ERISA 3(38)ERISA 3(21)
RoleInvestment ManagerInvestment Advisor
Risk ProtectionHighModerate
Fiduciary ResponsibilityAdvisorShared
Investment LineupAdvisor Makes Investment DecisionsPlan Sponsor Makes Investment Decisions
MonitoringYesYes
Research & AnalysisYesYes
Co-Fiduciary MeetingsYesYes