HR Professionals Liability in 401K Administration

HR Professionals are subject to two very high standards: The SHRM Code of Ethics and Fiduciary Responsibility. We will examine how these obligations are inter-related as well as the challenges of fulfilling both in today's environment. Since the WorldCom and Enron debacles, there has been an increasing focus by the DOL and the Plaintiff's Bar on fiduciary issues. Fiduciary Responsibility has both legal and ethical implications, but by definition a fiduciary is someone in a position of trust. Fiduciaries are trusted to provide their employees with a reasonable opportunity for "secure retirement income." However, the complexity of the 401k marketplace (often intentionally so by service providers) creates what we call a Fiduciary Paradox. The fiduciary paradox is where fiduciaries have legal and ethical obligations (which carry a personal liability) but most of the 401k service providers, who have no fiduciary duty, make it difficult for the fiduciary to fulfill their obligations – thus making it difficult for the HR Professional to uphold several portions of the SHRM Code of Ethics particularly those portions listed above. This presentation outlines the basic fiduciary duties, how service providers make it difficult to fulfill these duties, and what the HR Professional must do to overcome these difficulties. Each part of the presentation incorporates portions of the SHRM Code of Ethics.

Mark D. Mensack, AIFA®, AWMA®
Chief Ethics Officer
Piedmont Independent Fiduciaries

Mark D. Mensack is the Chief Ethics Officer of Piedmont Independent Fiduciaries, a Fee-only SEC Registered Investment Advisory firm.  Mark has been investing since 1984 and began his professional financial services career in 1995.  Prior to 1995, he was a Commissioned Officer in the US Army where he served in the United States and South Korea.  While he spent most of this time as a helicopter pilot, his final assignment was an instructor of Philosophy and Ethics at the United States Military Academy in West Point, New York.  Mark concluded the remainder of his career in the US Army Reserve.
Mark has earned a Bachelor’s from the University of Scranton in Philosophy and a Master’s in Philosophy from the University of Pennsylvania. He also holds several professional designations including, Accredited Wealth Management Advisor (AWMA) and the Chartered Retirement Plan Specialist (CRPS) through the College of Financial Planning and the Wharton School of Business; and the Accredited Investment Fiduciary Analyst (AIFA) designation through the Center of Fiduciary Studies.
As an independent fiduciary, Mark’s objective is to protect and enhance the retirement income security of retirement plan participants. Mark embraces the fiduciary standard with all of his clients and formally assumes ERISA 3(21)(a)(ii) fiduciary status, and can also assume ERISA 3(38) fiduciary status for retirement plan sponsors.
As Piedmont’s Chief Ethics Officer, Mark focuses on the ethical imperative of fiduciary responsibility to educate plan sponsors and other fiduciaries on their fiduciary duties.  He has addressed many professional organizations whose members act in a fiduciary capacity, including the Pennsylvania Institute of CPAs, Chapters of the Society of Human Resource Management, and the NJ Association of Women Business Owners. He also consults with the Business Integrity Alliance (BIA) on ethical and fiduciary issues within the governance and risk management arena.
Mark is a Regional Fiduciary for the National Retirement Security Plan, and was named a Five Star Wealth Manager by Philadelphia Magazine which places him in the top 4 percent of the 15,000 wealth managers in the Philadelphia area.