Broker Check

Plan Sponsor

Now, more than ever, it is critical to have a healthy and compliant group retirement plan. This holds true regardless of whether you are a participant, business owner or plan fiduciary. Unhealthy plans eat away at participants’ retirement assets and can put everyone involved at risk. The key to a successful retirement plan is having a well thought-out documented plan of action that is followed consistently, while periodically making strategic adjustments.

As individuals we occasionally need to go in for a check-up, make certain life changes or evaluate a habit that is causing us to be unhealthy. Imagine how healthy you could be if you had a doctor, nutritionist and trainer by your side guiding you and serving as your experts. Having Arcwood Financial LLC as co-fiduciaries on your 401k, pension or other retirement plan is like having that level of expertise and service for your financial health.

  • Our Process

    Prior to becoming a client, we will provide a detailed analysis of your current retirement plan’s health. Once you become a client we will then provide a strategy and be by your side as we manage to that strategy and make periodic adjustments.

    • Step 1:Multi-Point Analysis of Current Solution
      • Plan Design
        • Is your current plan designed efficiently to achieve the desired goal
        • Are there any other investment vehicles that would complement this solution (such as a traditional pension, a deferred comp plan, profit sharing, etc.)
      • Fiduciary Management
        • Do you have an Investment Policy Statement
        • How often does your Investment Committee meet
        • What’s your ERISA Management & Fiduciary Governance Process
      • Fees (Fees can be one of the most important aspects of a plan and come from a variety of parties involved)
        • Record-keeping
        • Third-Party Administrator
        • Advisory
        • Investments
      Step 2: Recommendations
      • As investment fiduciaries we will compare key aspects of your current investments and apply best practices in the fiduciary standard of care to institute an Investment Policy Process
      • Your funds will be reviewed for cost, performance and diversification
      • You will receive a peer benchmark review of your current administrative, fund and advisor fees
    • Step 3: Implementation
      • We will provide the roadmap for the proposed changes
      • We will establish a fiduciary process and show you how to manage to it
      • We will provide you with the proper documentation to affect and justify changes
      • We will work with all vendors to facilitate said changes
    • Step 4: Ongoing Service
      • Ownership/Executive and Employee education for retirement preparedness
      • Establishment and management of Fiduciary Process
      • Active fund monitoring, watch list and appropriate replacement
      • ERISA, DOL, IRS & Testing compliance & regulatory monitoring changes


    Most advisory groups have a single expertise when it comes to designing a retirement solution for a plan sponsor. Our team has decades of combined experience designing solutions for thousands of client groups. Whether you’re a small owner-only company requiring a simple plan, or a group that needs a multi-layer corporate structure with multiple products incorporating Qualified and Non- Qualified plans, we have experience that will meet your needs.

    • 401k
    • 403b
    • Profit-Sharing
    • Defined Benefit
    • SEP IRA
    • Deferred Compensation


    According to ERISA, a Plan Fiduciary is anyone that is an individual exercising discretion in the administration of the plan, a person that makes decisions on behalf of the plan, functions in its operation, a member of the plan’s administrative committee, a trustee, or an investment advisor to the plan. This broad definition covers a wide range of individuals who may not know of the liability they are taking and how they are considered fiduciaries to the plan who can be personally liable to restore any losses to the plan or profits (that should have been made) due to improper use of the plan’s assets resulting from their actions/ inactions or actions/ inactions of other fiduciaries.

    This can be a little daunting, however ERISA and the Department Of Labor states one way these fiduciaries can limit their liability is to demonstrate that they have carried out their responsibilities properly by acting prudently. This requires expertise in a variety of areas, for you to act within a prudent process, use reason and not enter into a prohibited transaction. Not sure what these mean? We do and this is one of the key areas of focus we have with our clients.

    We work with our clients and their vendors; Record-Keeper, Third-Party Administrator, CPA Auditing Firms, Fund companies and Payroll, to name a few. We understand your focus is on operating a successful business, making it imperative to work with a partner to act as co-fiduciary and proactively share in the management of the retirement plan(s).

    Am I a fiduciary? What are my duties? Most Importantly, what are my consequence if I or someone hired by the plan breaches those duties?


    • The 402 Named Fiduciary – ERISA provides that every employee benefit plan shall be established and maintained pursuant to a written instrument. This instrument must provide for one or more named fiduciaries with authority to control and manage the operation and administration of the plan. The named fiduciaries may be either named in the plan instrument or chosen, through a procedure specified in the plan, by the plan sponsor.
    • The 3(16) Named Plan Administer - Responsible for managing the day to day operation of the plan.  The duties of the plan administrator are set by ERISA and the terms of the plan document such as filing the 5500, determining eligibility, maintaining necessary records, distribute required documents, determining qualified domestic relations orders, QDROs

    A 3(38) named investment manager – An investment manager is special type of fiduciary, one who has been specifically appointed to have full discretionary authority and control to make the actual investment decisions. The manager may select, monitor, remove and replace the investment options


    Act in the best interest of participants

    • Discharge your plan duties solely in the interest of the participants and beneficiaries.
    • For the exclusive purpose of
      • Providing benefits to participants and their beneficiaries
      • Defraying reasonable expenses of administering the plan

    Act with care, skill, prudence and diligence

    • ...that a prudent person acting in a like capacity and familiar with such matters
    • ...would use in the conduct of an enterprise of a like character and with like aims

    Avoid prohibited transactions and be free from conflict

    • You must refrain from specific “prohibited transactions” including
      • Furnishing of goods, services or facilities between the plan and an interested party
      • An interested party includes any plan fiduciary and any person providing services to the plan
    • You can’t deal with the assets of the plan for your own account
    • Or receive compensation from any party dealing with the plan in a transaction involving plan assets

    Diversify the investment options to minimize the risk of large losses

    • The only exception is if, under the circumstances, it is “clearly prudent” not to do so
    • The burden of proof as to whether it is clearly prudent is on you, the fiduciary

    Follow the plan documents and instruments governing the plan

    • Insofar as they are consistent with ERISA
    • But not if following the documents would be imprudent


    Personally liable to the plan to make good any losses resulting from the breach. To restore any profits you might have made by improperly using plan assets. May also be subject to other penalties a court may impose

    • Such as an excise tax of 15% of the amount per year until correction
    • Plus an additional 100% on uncorrected transactions

    A potential additional penalty of 20% if the Department of Labor is involved in the case. Co-fiduciary liability for participating in, concealing, or not stopping the breach of another fiduciary


    When was the last time you did a fund review with your current advisor? If it was longer than a year ago, can you be sure the funds are performing to the investment strategy or adhering to your plan document?

    • As Investment Advisors we evaluate and design custom portfolios for our clients
    • Having open architecture platforms with nonproprietary funds allows us to provide non- biased advice
    • We can act as a 3(21) Co-Fiduciaries or 3(38) Investment Manager to your plan
    • As investment fiduciaries we will compare key aspects of your current investments and apply best practices in the fiduciary standard of care to institute an Investment Policy Process
    • Funds will be reviewed multiple times per year, and as needed added to a watch list or possibly replaced (DOL recommends semi-annually)
    • What is the difference between a 3(21) and a 3(38) investment fiduciary? While this question is being asked with increasing frequency, many remain confused about the distinctions relating to these important numbers.

      A 3(21) investment fiduciary is a paid professional who provides investment recommendations to the plan sponsor/trustee. The plan sponsor/trustee retains ultimate decision-making authority for the investments and may accept or reject the recommendations. Both share in the fiduciary responsibility. on the other hand, by properly appointing and monitoring an authorized 3(38) investment manager, a plan sponsor/trustee is relieved of all fiduciary responsibility for the investment decisions made by the investment professional.

      Decoding 3(21) versus 3(38) fiduciaries is found in the section numbers of the law itself. ERISA is the major law governing the operation of employee benefit plans. Section 3 of ERISA contains the definitions of the terms used in the act. The 21st definition (ERISA Section 3(21)) is the definition of fiduciary. A fiduciary is:

      1. Anyone who makes decisions about managing the plan or its investments, such as selecting the investment choices for participants or hiring persons who provide services to the plan
      2. Anyone who makes decisions about administering the plan, such as determining eligibility of participants, providing benefits statements and ruling on benefits claims, or
      3. Anyone who is paid to provide investment advice to a plan.

      Typically, the plan sponsor/trustee makes the first category of decisions, while the plan administrator makes the second category of decisions. To meet the third category, one must provide investment advice, which currently includes recommendations to invest in, purchase or sell securities:

      • On a regular basis to the plan
      • Pursuant to a mutual agreement, arrangement or understanding, written or otherwise
      • That the services will serve as a primary basis for investment decisions
      • Individualized to the needs of the plan
      • For a fee

      Anyone who is a fiduciary is a 3(21) fiduciary because that is simply the number of the section in ERISA that contains the overall definition. This includes the plan sponsor, trustee, plan administrator and investment fiduciary

      An investment fiduciary is a paid service provider that gives investment recommendations but does not necessarily have discretionary authority to make the actual investment decisions. Instead, the 3(21) investment fiduciary typically provides suggestions to the plan sponsor, who is free to accept or reject those recommendations and who must then execute the investment decisions for the plan. The plan sponsor and the 3(21) investment fiduciary, therefore, share fiduciary responsibility.

      The 38th definition in the act (ERISA Section 3(38)) is the definition of investment manager. An investment manager is special type of fiduciary, one who has been specifically appointed to have full discretionary authority and control to make the actual investment decisions. The manager may select, monitor, remove and replace the investment options offered under the plan. Only certain types of financial institutions may be appointed as a 3(38) investment manager. The 3(38) must be a registered investment adviser, bank or insurance company and must acknowledge its fiduciary status in writing. It is important that service agreements be carefully drafted to provide for both the appointment of a 3(38) and for the acknowledgement of fiduciary status.

      Once properly appointed, the 3(38) investment manager has full fiduciary responsibility for its investment decisions, subject to the terms of the plan documents and its investment policy statement. The plan sponsor and all other plan fiduciaries are relieved of all fiduciary responsibility for the investment decisions made by the investment manager. The plan sponsor does have a continuing responsibility to monitor whether the investment manager is actually performing the services, but need not second guess the investment managersinvestment decisions.

      This shifting of fiduciary responsibility is the key distinction — and core advantage — of using a 3(38) investment manager like Arcwood Financial. In the face of ever-increasing litigation and heightened regulatory scrutiny, many plan sponsors want this extra layer of protection, especially if they are not comfortable making the plan’s investment decisions themselves. Our service documents and E&O policies cleary define out acceptance of this role. Further, our transparent and documented investment monitoring and investment replacement procedures can give you the comfort of knowing our team is monitoring these functions diligently.


    As an owner or executive of a company you are likely looking at these types of investment vehicles for a myriad of reasons. You may be saving money for your own retirement, looking for a way to save taxes or as a benefit to help retain key employees. With decades of accumulated experience, we have worked with owners and executives of all types of companies. From small private companies, partnerships with complicated structures to large publicly traded corporations. We will work with you to develop a strategy customized for your business and re-evaluate it as your needs and/or regulations change.

    Things to consider:

    • Are you protected as much a possible from a fiduciary perspective?
    • Is your current advisor a retirement plan specialist or a wealth manager?
    • Does your strategy protect you from creditors?
    • How efficient is your tax strategy, for today and at retirement?
    • Have you looked at combining a multi-product solution to meet your tax savings and retirement goals?
    • Are you getting adequate service for the fees being charged?
    • Are you diversified enough?
    • Is your portfolio performance in line with your risk-adjusted return?


    Are you currently meeting your fiduciary requirements? According to ERISA, in 2013 about 75% of plans in the United States were out of compliance. The Department of Labor (DOL) has now hired 1,000 new investigators to enforce ERISA rules by serving as watchdogs and issuing government fines (or worse) to offending employers. With an estimated 88 individuals criminally indicted for offenses related to their own benefits plan. This information is according to the DOL who also reported the average fine has gone up to $600,000 per plan.

    As a plan sponsor you have a duty to act in the best interest of the participants of the plan and you need to be a prudent expert. Are the companies you hired to manage this process assuming responsibility as a co-fiduciary? Most Record-Keepers and Third-Party Administrators will not assume this job. Most financial advisors in the United States are not allowed to assume this job due to licensing or broker-dealer restrictions.

    We serve as co-fiduciaries to almost all of our plans. We will develop the process for you and together we will manage to that process.

    Things to consider:

    • Forming an Investment Committee
    • Running the Investment Committee meetings
    • Establishing an Investment Policy Statement
    • Establishing an Education Policy Statement
    • The ability to demonstrate Prudent Process
    • Fee and performance Reasonableness
    • Avoiding Plan Deficiencies and Prohibited Transactions
    • Continually benchmarking service providers with peer group data