A 3(21) fiduciary is an advisor to an employer's retirement plan, such as a 401(k), who recommends the plan's investments but leaves the final decisions to the employer.
The name comes from Section 3(21)(A) of ERISA, the federal law for employer retirement plans. A person is a plan fiduciary to the extent they exercise discretion over the plan or its assets, give investment advice for a fee, or have discretion in running the plan. The Department of Labor stresses that fiduciary status depends on what someone does for the plan, not their title.
In a 3(21) arrangement, the advisor's recommendations are held to ERISA's fiduciary standard, but the employer chooses the investments and stays responsible for those choices. If you run a business and want the advisor to make and own the investment decisions, you're looking for a 3(38) investment manager instead.
This is a separate standard from the fiduciary duty a registered investment adviser owes individual clients under the Investment Advisers Act.
How to check
The plan's written service agreement should say whether the firm acts as a 3(21) fiduciary, a 3(38) investment manager, or neither. Look the firm up on the SEC's Investment Adviser Public Disclosure site.
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