Fiduciary Service
3(38) Investment Manager Services: Transfer 401(k) Fiduciary Liability Off Your Desk
An ERISA 3(38) Investment Manager is a discretionary investment fiduciary with the legal authority — and obligation — to select, monitor, and replace the investments in your company 401(k) plan. When appointed in writing, the liability for those investment decisions moves away from the plan sponsor and onto the manager.
What a 3(38) does
Discretion, documented and delegated.
Under ERISA §3(38), a named fiduciary may appoint an investment manager who has the power to manage, acquire, or dispose of plan assets. Once appointed, the manager assumes the fiduciary duty of prudence for those investment decisions. The plan sponsor is no longer liable for individual fund picks — provided the appointment was prudent and is monitored.
- Selects the plan's core investment lineup
- Monitors fund performance, fees, and share classes
- Replaces underperforming or imprudent investments
- Documents the prudent process in writing
- Accepts fiduciary responsibility in the engagement agreement
Liability transfer
What liability actually shifts?
Without a 3(38), the plan sponsor typically retains full responsibility for every investment decision — even when relying on a recordkeeper's default menu or a broker's recommendations. With a properly appointed independent 3(38) Investment Manager, the duty to prudently select and monitor individual investments transfers to that manager.
| Responsibility | Without a 3(38) | With an independent 3(38) |
|---|---|---|
| Fund selection | Plan sponsor chooses or approves every fund | 3(38) selects the lineup |
| Ongoing monitoring | Plan sponsor must monitor and document | 3(38) monitors and acts prudently |
| Investment replacement | Plan sponsor decides when to replace funds | 3(38) replaces funds as fiduciary |
| Liability for imprudent investments | Plan sponsor is personally exposed | Liability rests with the 3(38) manager |
| What the sponsor retains | All investment fiduciary duties | Duty to prudently hire and monitor the 3(38) |
3(21) vs 3(38)
Advice does not transfer liability. Discretion does.
A 3(21) Adviser recommends investments but does not have discretionary authority. The plan sponsor still approves every decision and remains responsible for it. A 3(38) Investment Manager has discretion — the legal authority to act on behalf of the plan — and accepts the fiduciary liability that comes with it.
Gatekeeper Investment Advisers serves as your 3(21) Adviser. We do not act as the 3(38) Investment Manager. Instead, we engage an independent third-party 3(38) Investment Manager through the RFM 401(k) Maneuver PEP to assume that discretionary responsibility in writing.
Our arrangement
How Gatekeeper engages the 3(38) Investment Manager for you.
01
Plan review
We benchmark your current fees, fund lineup, and fiduciary documentation — at no cost.
02
Written appointment
The independent third-party 3(38) Investment Manager (via the RFM 401(k) Maneuver PEP) accepts discretionary fiduciary status in writing.
03
Lineup optimization
Institutional share classes, prudent diversification, and documented monitoring replace guesswork.
04
Ongoing stewardship
Quarterly investment reviews, annual plan-sponsor reports, and professional account management.
This structure keeps your existing recordkeeper in place and typically transitions plans in under 60 days with no participant impact beyond stronger fiduciary oversight.
Ready to move discretionary investment liability off your desk?
Book a 20-minute call. We'll explain how the 3(38) engagement works, review your current plan, and outline what liability can be transferred.
FAQ
Common questions about 3(38) Investment Managers.
- What is an ERISA 3(38) Investment Manager?
- An ERISA 3(38) Investment Manager is a named fiduciary with discretionary authority to select, monitor, and replace the investments in a 401(k) plan. When appointed in writing, the manager assumes fiduciary responsibility for those investment decisions.
- Does a 3(38) Investment Manager transfer liability away from the plan sponsor?
- Yes. When an independent 3(38) Investment Manager is prudently appointed in writing, the liability for selecting and monitoring individual plan investments transfers from the plan sponsor to the 3(38) manager. The sponsor retains the duty to prudently hire and monitor the manager.
- What is the difference between a 3(21) Adviser and a 3(38) Investment Manager?
- A 3(21) Adviser provides investment recommendations, but the plan sponsor retains approval authority and liability. A 3(38) Investment Manager has discretionary authority to act without sponsor approval for each investment decision and accepts the associated fiduciary liability.
- Is Gatekeeper Investment Advisers the 3(38) Investment Manager?
- No. Gatekeeper Investment Advisers serves as your 3(21) Adviser. We engage an independent third-party 3(38) Investment Manager through the RFM 401(k) Maneuver PEP to assume discretionary investment fiduciary responsibility for your plan.
- Will hiring a 3(38) Investment Manager change our plan's recordkeeper?
- No. The arrangement keeps your existing recordkeeper in place. The independent 3(38) Investment Manager assumes responsibility for the plan's investment lineup while administration and recordkeeping continue with your current provider.
- How long does it take to appoint a 3(38) Investment Manager?
- Most plans transition in under 60 days, including the complimentary plan review, written appointment, lineup optimization, and participant communication. There is typically no participant impact beyond stronger fiduciary oversight.
Educational content — not legal, tax, or investment advice. The specific fiduciary responsibilities of your plan depend on your plan documents and applicable law. Consult your ERISA counsel for guidance on your situation.