Why Investment Monitoring and Fee Benchmarking Are Critical Fiduciary Responsibilities
Most employers understand that offering a 401(k) plan comes with certain administrative duties, but one of the most important—and most misunderstood—is the responsibility to continuously monitor the plan’s investments and fees. This isn’t a one-time setup task. Under ERISA, employers must regularly review investment performance, evaluate expenses, assess fund suitability, and ensure that every option in the lineup remains prudent for participants. It’s a serious obligation, and one that directly impacts employee outcomes and employer liability.
Investment monitoring starts with understanding how each fund in the plan is performing relative to its benchmark and peer group. It’s not enough to simply glance at returns once a year. Employers must evaluate risk-adjusted performance, underlying costs, management changes, and long-term consistency. A fund that looks fine on the surface may be lagging behind alternatives or charging higher fees than comparable options. Without diligent monitoring, these discrepancies can go unnoticed—and participants pay the price through reduced growth.
Fee benchmarking is equally important. In recent years, lawsuits against retirement plan sponsors have increased dramatically, many of them focused on excessive fees. Even small differences in expense ratios or administrative charges can raise red flags if they’re not justified or regularly reviewed. Employers must ensure that investment fees, advisory fees, recordkeeping fees, and share classes remain competitive. The requirement isn’t to choose the cheapest option—it’s to ensure fees are reasonable relative to the services provided. But without documented benchmarking, even reasonable decisions can appear imprudent in hindsight.
This fiduciary responsibility becomes more complex as plans grow. The larger the plan, the more rigor regulators expect. And while many employers assume their recordkeeper or payroll provider handles monitoring, the legal responsibility ultimately rests with the plan sponsor unless formally delegated. That means HR teams and business owners—often without investment expertise—are expected to make decisions typically reserved for financial professionals. It’s a mismatch that can create unnecessary exposure.
Regular investment committee meetings, structured review processes, and detailed documentation are essential. Employers must be able to show not just that decisions were made, but how they were made and why they were prudent. Without this paper trail, even well-intentioned decisions can become liabilities if a fund underperforms or if a participant challenges the plan. Fiduciary oversight is only as strong as its documentation.
This is where the value of professional fiduciary support becomes clear. When employers join a Pooled Employer Plan, the investment fiduciary responsibility shifts to a 3(38) investment manager—a specialist whose job is to monitor performance, review fees, replace underperforming funds, and ensure the lineup stays aligned with industry best practices. Rather than acting as co-fiduciaries (as in a 3(21) advisory model), employers transfer discretion entirely to a qualified expert. This creates stronger oversight, reduces employer liability, and ensures decisions are made based on deep investment knowledge and disciplined process.
At Apex Wealth Path, our PEP structure includes full 3(38) investment fiduciary services as part of the standard offering. We conduct ongoing due diligence, perform fee benchmarking across vendors, maintain detailed documentation, and proactively update the investment lineup when better options emerge. Our goal is to protect both the plan sponsor and the participants by ensuring every investment remains prudent and competitive. Employers retain control over the broad structure of the plan, while we handle the technical and fiduciary complexities.
Investment monitoring and fee benchmarking aren’t optional tasks—they’re core fiduciary responsibilities that shape the long-term success of your retirement plan. When these duties are executed professionally and consistently, employees benefit from stronger investment outcomes and employers benefit from reduced risk. It’s the foundation of a healthy, compliant, and future-focused 401(k) program.
Stephen Bellosi, AIF®, AWMA®
Managing Partner, Apex Consulting