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Understanding ERISA: A Compact Guide to the Landmark Act


“The scope and complexity of ERISA has led to a widespread lack of understanding of both its basic principles - and the liabilities to which trustees and fiduciaries may be subjected. This compact new guide clarifies both in simple, understandable terms. Financial advisors will find it particularly useful in establishing compliance procedures within their practices - and every advisor in your firm should have a copy.” - Harold Evensky, Chairmain, Eversky Group and author of the best selling book, Wealth Management

The landmark ERISA legislation ushered in a new set of protections for participants in employee benefit plans, and the trustees and fiduciaries who administer them.

But, as beneficial as ERISA has proven to be for all involved - those who need to comply with it most have found its far-reaching, densely written directives difficult to decipher. Consequently, many financial advisors fear they are not in compliance. And, as the Enron debacle has illustrated, non-compliance could leave advisors and fiduciaries open to liability challenges.

Now, Thornburg Securities president Ken Ziesenheim clears the air and shows professionals how to protect themselves, their firms and their clients by adhering to ERISA specifications. In clear, concise terms Ken explains 4 key provisions of ERISA which will keep anyone who writes investment objectives for clients or hires an outside manager to oversee funds - in compliance. He covers all the critical steps including …

  • Guidelines for selecting & hiring a manager
  • Monitoring activities of an outside manager
  • Properly documenting meetings/activities to avoid complications
  • How the “Prudent Investor Rule” is interpreted and applied

With sample forms, policy statements, a glossary of terms and more - Ken Ziesenheim makes understanding - and complying with ERISA - easy.

Foreword i

Introduction 1

Chapter 1. Fiduciary Conduct 5

Chapter 2. Liabilities and Penalties 7

Chapter 3. Government Agencies 11

Chapter 4. Prudent Investor Rule 13

Chapter 5. Uniform Prudent Investor Act 17

Chapter 6. Prudent Investment Procedures 25

Chapter 7. Written Investment Policy 29

Chapter 8. Sample: Investment Policy Statement 35

Chapter 9. Investment Management Procedures 45

Chapter 10. Diversification of Plan Assets 47

Chapter 11. Asset Allocation 53

Chapter 12. Risk Management 57

Chapter 13. Prohibited Investment Transactions 59

Chapter 14. Monitoring and Evaluation 61

Chapter 15. The Investment Professional 63

Chapter 16. Investment Management Consultant 71

Chapter 17. 404(C) Plan 79

Chapter 18. 401(K) Plans 95

Chapter 19. Summary 99

Chapter 20. Appendix A - Supplement to A Management Agreement 101

Glossary of Investment Terminology 105

Bibliography 124