The Cost of Staying: Why Knowing There's a Problem May Be Your Biggest Fiduciary Risk

Over the last three episodes of The LoVasco Briefing, we've explored what it means to be a fiduciary, what true governance looks like, and how to benchmark a retirement plan beyond simply comparing fees.

For many plan sponsors, those conversations can be eye-opening.

They begin to recognize gaps in their governance process. They realize they may not have the documentation regulators expect. They discover that benchmarking involves much more than a quarterly investment report. And sometimes, they start to wonder whether their current advisor, recordkeeper, or overall oversight process is really serving the plan as well as it should.

But that realization creates a new question: What happens when you know something isn't right—and you still don't make a change?

That question is the focus of Episode 4 of The LoVasco Briefing and the reason we're hosting our upcoming fiduciary governance training, The Governance Gap, on June 29.

Because for many organizations, the greatest risk isn't what they don't know. It's what they already know—and choose not to address.

Watch the full episode below to see Mike Iley and Jim Chapman guide clients through these questions and toward better understanding.  

Want to have these questions answered for your organization in particular? Join us on June 29th for a live training, “The Governance Gap”  A Fiduciary Governance Training for Plan Sponsors and Executives,” and walk away better prepared, better informed and better aligned with ERISA’s compliance guidance.

The Governance Gap Isn't Always About Knowledge

Most fiduciary problems don't begin with bad intentions. They begin with inertia.

A committee notices that service isn't what it used to be. A benchmark review suggests fees may be out of alignment. Operational issues keep surfacing. Participant questions go unanswered. Meeting minutes aren't being documented consistently. Something feels off.

But rather than addressing the issue, the organization tells itself: "We'll deal with it later."

That response is far more common than many people realize. As Jim Chapman explained during the episode, there are generally two reasons organizations delay action.

The first is relationships. Many plan sponsors have worked with the same advisor, provider, or consultant for years. The relationship is comfortable. There is trust. There may even be personal friendships involved.

The second is the belief that making a change will be disruptive, time-consuming, and burdensome. In both cases, organizations convince themselves that maintaining the status quo is the safer option.

Unfortunately, that's not always true.

Sometimes Doing Nothing Is a Decision

One of the most important concepts discussed in the episode is the idea that choosing not to act is still a fiduciary decision. That can be uncomfortable to hear. Many plan sponsors assume risk comes from making the wrong decision. But under a fiduciary framework, knowingly ignoring a problem can create its own set of challenges.

As Jim explains, when organizations recognize gaps and intentionally postpone addressing them, they may actually invite more scrutiny than if the issue had never been identified in the first place.

Why? Because fiduciary responsibility isn't simply about knowledge. It's about acting in the best interests of participants. Once you become aware of a potential issue, the expectation is that you'll evaluate it and respond appropriately. That doesn't always mean replacing providers or overhauling the entire plan. But it does mean taking the concern seriously.

The Myth of the Massive Overhaul

One of the biggest misconceptions in the retirement plan industry is that improving fiduciary oversight requires a complete teardown and rebuild. It doesn't.

In fact, Jim noted that one of the most common objections he hears is the assumption that hiring a new consultant automatically means changing recordkeepers, replacing investments, disrupting participants, and launching a major internal project.

The reality is often much simpler. In many cases, the first step is simply putting a proper governance framework in place.

That means:

• Establishing a committee charter
• Creating or updating an Investment Policy Statement
• Implementing a fiduciary calendar
• Conducting benchmarking reviews
• Building a fiduciary file
• Documenting meeting minutes and decision-making rationale

Most of this work happens behind the scenes. Participants typically continue using the same website, the same login credentials, and the same retirement accounts.

The biggest change isn't operational. It's organizational. The plan begins operating under a documented, defensible fiduciary process.

What Relief Actually Looks Like

One of the more revealing moments in the conversation came when we discussed what happens psychologically after a governance process is installed.

Most plan sponsors don't wake up excited to manage a 401(k). Their expertise is elsewhere. They're CEOs, CFOs, HR leaders, and operations executives. Retirement plans are important, but they're rarely the primary focus of their day.

As Jim described it, many leaders carry a quiet uncertainty in the background. They know the retirement plan matters. They know they have fiduciary responsibility. They just aren't always confident they're doing everything they should be doing.

When a proper governance process is implemented, that uncertainty often gives way to something else: Relief. Not because responsibility disappears. But because the responsibility becomes structured, documented, and manageable. The committee knows what it's supposed to do. The governance calendar exists. Decisions are documented. Fiduciary files are maintained. The process becomes clear.

And clarity reduces anxiety.

The Biggest Misconception We Hope to Eliminate

At the conclusion of the episode, I asked Jim what misconception he hopes listeners leave behind after this four-part series. His answer was simple…

Many plan sponsors believe that doing the basics is enough. The annual 5500 gets filed. A quarterly investment report gets reviewed. Someone occasionally glances at fees. And that becomes the governance process.  

But true fiduciary oversight requires more than completing administrative tasks. It requires a documented process. It requires deliberation. It requires governance.

Most importantly, it requires evidence that fiduciaries are actively fulfilling their responsibilities in the best interests of participants. That's the difference between checking boxes and building a defensible fiduciary process.

Join Us for The Governance Gap

This podcast series was designed to raise awareness. The next step is implementation.

On June 29, we're hosting “The Governance Gap: A Live Fiduciary Governance Briefing for Plan Sponsors and Executives.”

This is not a sales presentation. It's a practical, educational training designed for anyone responsible for overseeing a company retirement plan.

During the session, we'll go deeper into:

• Responsibilities and liability
• Governance structures and documentation
• Benchmarking best practices
• Operational oversight
• Building a defensible fiduciary file
• Common governance gaps and how to address them

We'll show you exactly what a prudent fiduciary process looks like and provide a framework you can use whether you choose to implement it yourself or work with a consultant.

If you've followed this podcast series and found yourself wondering whether your plan is as protected as it should be, this training was built for you.  

Because the greatest fiduciary risk isn't always what you don't know. Sometimes it's knowing something needs to change—and choosing to stay where you are.

Reserve your seat for today The Governance Gap on June 29.