Small business 401k plans are increasingly becoming a viable growth option for financial advisors, but it can be difficult to navigate the breadth of available custodians, record keepers, and other service providers, as well as how to piece them together. This is particularly true when evaluating 3(21) and 3(38) fiduciary options.

While 3(21) fiduciary services tend to be more popular – offered by 82 percent of retirement plan specialist advisors in 2016 – interest in 3(38) fiduciary services is growing.1 Why? With 3(21) plans, the employer serves as a co-fiduciary with the advisor. Advisors provide advice, and the employer retains the discretion to accept (or reject) this guidance. Fiduciary responsibility can feel risky, and some employers feel like they don’t have the expertise to take on the role. 3(38) plans give advisors full discretion to make investment menu decisions on behalf of employers, providing them with greater support and decreased liability and advisors with more autonomy – an attractive option for those seeking skilled advice and who may be used to an advisor managing their personal wealth in the same way.

With demand for 3(38) services growing, we find that many advisors would like to offer these services but don’t necessarily have the time or experience to grow this segment of their practice on their own. To help address these concerns and make 3(38) services available to more employers, we developed a 3(38) outsourced fiduciary solution.

Our flexible, single-source solution for retirement plan advisors and employers encompasses research, monitoring, and reporting on the investments offered in a retirement plan. Our proprietary, data-driven methodology uses a strict set of standards and a systematic process for investment selection and monitoring. Our services include:

  • Recommended investment lineups with corresponding research and reporting
  • Ongoing and rigorous investment monitoring
  • Plan-specific quarterly reporting
  • Fund mapping

What differentiates our solution from others is our robust technology and wide network of integrations, which enable us to seamlessly partner with any record keeper and custodian that an advisor or employer prefers. As a result, we can quickly pull in a plan’s data and present a comprehensive view of its assets, where the assets are invested, and the performance of the underlying investments. We then receive data on an ongoing basis – at least monthly – giving us the ability to evaluate plans and track them against our performance criteria, while also enabling the advisor to review and analyze key information and make critical decisions.

We’re continuing to innovate within the 3(38) market by seeking out partnerships to develop comprehensive 401k packages that aim to be cost-effective and easy to integrate into an advisory practice. We recently announced our newest package, PremierPath401k, which is custodied by BNY Mellon’s Pershing Retirement Plan Network, uses July Business Services as the record keeper, and includes a 3(38) investment lineup managed by Envestnet Retirement Solutions (ERS). The package, which is fully integrated into the Envestnet platform, includes a dynamic, customized target date plan built and managed by some of the best-in-breed asset managers.

Tech-enabled retirement solutions that leverage the collaboration of service providers and offer advanced research capabilities, access to integrated analytics, and advisory support should make the process of onboarding and managing high-quality 401k plans easier. We aim to continue to bring innovative retirement solutions to market, enabling advisors to better assist employers in helping to make financial wellness a reality for their employees, helping to fill potential gaps in services, complement their team, and to enhance client support capabilities. To learn more about leveraging our 3(38) services and PremierPath401k, contact


1. Greg Lacurci, “3(38) vs. 3(21) investment fiduciary services: the pros and cons for 401(k) advisers,”, last modified on April 7, 2017,

The information, analysis and opinions expressed herein are for informational purposes only and do not necessarily reflect the views of Envestnet. These views reflect the judgment of the author as of the date of writing and are subject to change at any time without notice. Nothing contained in this piece is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Plan sponsors should always conduct their own initial and ongoing research and due diligence on third-party service providers, including but not limited to trustees, investment managers, record keepers, and third-party administrators.

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