Built-In 3(38) or Optional Outside 3(38) Fiduciary Services?


As a financial advisor, helping clients with their retirement investments is a big part of your job. And when it comes to retirement planning, 401(k) plans are the gold standard in the U.S. 

Here at 401GO, we provide a valuable service to small business owners by providing them with an easy, affordable way to offer their employees a 401(k) plan. Many of these small businesses rely on the services of a financial advisor to help them navigate the seemingly convoluted path of investing. With 401GO, financial advisors can choose between built-in or outside 3(38) fiduciary services.

Built-in 3(38): How Does It Work?

As with any career, being a financial advisor comes with pros and cons. Finance is an exciting field, but that excitement comes with a price: risk. Depending on a number of factors, including the types and numbers of clients you have, your expertise and experience in various areas of finance, your comfort level taking on certain challenges and assuming risk, and your ability to weather the storms that are part of the finance and business landscape, you may prefer to delegate the task of assuming some of that risk to our 401GO advisor.

We operate a robo-advisor that financial advisors can count on to select and execute investments on their behalf. Our advisor fulfills all the requirements necessary to act as your client’s 3(38). Our 3(38) creates a robust and affordable fund lineup, saving them (and you) money, time and risk.

Selecting funds and managing investments isn’t easy — if it was, anyone could do it. But just anyone can’t do it — in fact, they’re not even allowed to, since ERISA was written to protect companies and individuals from devastating losses incurred through mismanagement due to inexperience, ignorance, genuine errors and, as much as possible, intentional fraud.

In selecting investment lineups for your clients, our financial advisor ensures they are:

  • Astutely chosen — Financial advisors can count on the experience and professionalism of our 3(38) services. We’re here to assume the risk and take some of the work off your plate.
  • Economical — The services you perform for your clients saves them money, and the services you receive from the GO Invest advisor saves you money. The more you save, the more competitive your rates can be, and the more your bottom line can grow.
  • Diversified — Diversification in a retirement portfolio or under ERISA 3(38) fiduciary rules involves spreading investments across different asset classes, industry sectors and geographic regions, to reduce risk. This strategy aims to protect against market volatility and large losses. Fiduciaries must ensure that plan investments are diversified to fulfill their obligations and provide participants with a range of investment options.

Additionally, GO Invest reviews all investment options quarterly and adjusts them as needed to maintain a healthy lineup.

Acting as a 3(38) Fiduciary

As much as financial advisors love the built-in advisor option for its flexibility, efficiency and reliability, there are times when you may want to assume the 3(38) role yourself and create custom fund lineups using our proprietary fund builder. This allows you to play more of an active role, keep more control and take the reins of your clients’ investments, managing their assets on their behalf.

While some financial advisors are content in a 3(21) role in which they are limited to offering advice and making suggestions to the plan sponsor, taking on a 3(38) role gives you the added responsibility of selecting the investments. For some financial advisors, taking on this role gives them valuable experience and helps build skills that they can parlay into growing their business. Others who go this route have worked as financial advisors for many years and are comfortable in the role of a 3(38), thus, they do not have the worry of finding enough time and resources to fulfill their clients’ needs, because they already are well-versed in this area.

A Third Option: 3(38) Partnerships

Yet another valuable option 401GO provides its clients is the opportunity to partner with a third party who can act as a 3(38). With this option, you can provide your clients 3(38) service without having to furnish that service yourself. This is a perfect hybrid option for financial advisors who want to keep as much control as possible without having to devote the necessary time and effort to deliver the complete services your clients need.

Our 3(38) partners specialize in creating investment lineups and keeping them updated and tidy.

You can suggest and select investments for your clients, but instead of implementing the investments yourself, you may choose to partner with one of our third parties. As much as so many of us have come to love the automated services that make our daily lives so much easier — like the 3(38) services provided by GO Invest — we know that some people still like dealing with individuals, and for them, we offer our third-party service for a small additional fee.

401GO: More Choices for 3(38) Services

At 401GO, we offer our clients so many choices because we want them to have the flexibility to manage their clients’ investments in the manner that suits them best. Whether you prefer to act as your clients’ 3(38) or to outsource this service, we want you to know that when you work with 401GO, you have that choice. 401GO saves you — and your clients — time and money.

Secure your future today. Enroll in your 401(k) plan now.

Nate Beck
As a business owner and automation expert, Nate is dedicated to creating streamlined user experiences.
Secure your future today. Enroll in your 401(k) plan now.