A 3(38) fiduciary is an investment manager an employer hires to choose and change a retirement plan's investments itself, taking on that responsibility in writing.
Section 3(38) of ERISA defines an investment manager as a fiduciary with the power to manage, buy or sell plan assets that is a registered investment adviser, a bank or a qualified insurance company, and that has acknowledged in writing that it is a fiduciary to the plan.
The Department of Labor says an employer that prudently appoints such a manager is not liable for the manager's individual investment decisions. The employer still has to choose carefully and monitor the manager periodically, including what it charges.
The difference from a 3(21) fiduciary is advice versus decisions: a 3(21) advisor recommends, a 3(38) manager decides.
How to check
Ask for the written acknowledgment of fiduciary status in the agreement, and confirm the firm's registration on the SEC's Investment Adviser Public Disclosure site.
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