Old Slip Capital Opens Miami Office and Issues ERISA Advisory

Old Slip Capital has announced the opening of its new office in Miami, FL. In addition to this expansion, the company has issued an advisory directed at plan sponsors, emphasizing the advantages of engaging ERISA Fiduciary Advisors. The advisory underlines the differences between an ERISA Fiduciary Advisor and a Standard Broker or Advisor, highlighting the insufficient protection offered by the latter.

According to James Lukezic, Managing Director at Old Slip Capital, there are significant risks associated with not hiring an ERISA Fiduciary Advisor under sections 3(38) or 3(21) or both. Lukezic explains, "Plan Sponsors think that simply having an Advisor at the table is enough until they (Plan Sponsor) realize that a Standard or Retail Advisor is giving them arm’s length advice and not truly taking on liability or responsibility for that advice. With a sanctioned ERISA Fiduciary Advisor, Plan Sponsors can shift that liability to the ERISA Advisor and his or her firm; that includes personal liability on the part of the investment committee members."

The advisory also addresses the increased scrutiny from plaintiffs’ class action lawyers in fiduciary breach lawsuits, the Department of Labor in ERISA plan audits, courts, and insurers. These entities are paying closer attention to how well ERISA plan fiduciaries follow procedural due process. The actions or inactions of committees and individual investment committee fiduciaries are being examined in greater detail, raising concerns among fiduciaries about their adherence to best practices for plan governance.

Old Slip Capital points out that understanding the roles and types of Fiduciaries can be confusing. There are Trust Fiduciaries, Administrative Fiduciaries, and ERISA Fiduciaries, with the latter being the most crucial. The role of the ERISA Fiduciary is pivotal, as this advisor provides essential guidance to the Investment Committee, significantly impacting the success of the retirement plan.

The advisory further elaborates that competence in acting as a fiduciary on the investment committee extends beyond having subject matter expertise; it also demands sufficient time commitment. The advisory cautions against the potential conflicts of interest that may arise when a corporate director switches roles to act as a plan fiduciary. Even a director with the necessary expertise often lacks the time and inclination to perform more than an oversight role. Furthermore, it is emphasized that the Board of Directors should never assume the role of the Investment Committee. Unfortunately, this is a common fiduciary governance structure among employer-sponsored plans.

Old Slip Capital’s expansion to Miami and its recent advisory signify important developments for plan sponsors and the broader financial advisory industry. By highlighting the critical role of ERISA Fiduciary Advisors, the company aims to enhance the governance and success of retirement plans, ensuring better protection and outcomes for plan sponsors and beneficiaries.