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Why “Best Practices” Still Require Fiduciary Judgment
Last Updated: June 30, 2026
Retirement plan committees are constantly exposed to new ideas.
Recordkeepers, advisers, consultants, industry publications, and conferences all introduce emerging trends and “best practices” intended to improve participant outcomes. Many of these ideas can offer valuable insights and are worth thoughtful consideration.
In committee discussions, one common point of reference is:
“Most plans are doing this now.”
While peer adoption can provide helpful context, it is only one input in the decision-making process. Under ERISA, fiduciaries are not expected to mirror what other plans are doing, but they are expected to make decisions based on what is prudent for their own plan and participants.
The Fiduciary Standard Under ERISA
Retirement plan fiduciaries are responsible for more than simply selecting investments or approving plan changes. Under ERISA, fiduciaries are required to act solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing benefits and paying reasonable plan expenses. They must also carry out their responsibilities with the care, skill, prudence, and diligence that a knowledgeable professional would exercise under similar circumstances.
Importantly, ERISA focuses on the process used to make decisions rather than whether a particular decision ultimately proves successful. The Department of Labor expects fiduciaries to demonstrate that they evaluated relevant information, considered alternatives, and acted in the best interests of participants. Failing to follow a prudent process can expose fiduciaries to regulatory scrutiny, litigation, and even personal liability.
This is where many committees unintentionally create risk. When a decision is justified primarily because it is considered an “industry best practice”, there may be little evidence that the committee independently evaluated whether the change was appropriate for its own participants. A trend may be worth considering, but fiduciaries are expected to determine whether it solves a real problem within their plan and supports better participant outcomes.
How Industry Trends Fit Into the Fiduciary Process
Industry trends can be valuable sources of information. They often highlight new approaches, evolving participant needs, and changes in the retirement landscape. However, a trend should be the beginning of the conversation, not the end of it.
The key fiduciary consideration is how those trends are evaluated within the context of a specific plan. A trend may ultimately be appropriate, but it is most effective when it is connected to a defined need or objective within the plan.
Before implementing a change, committees often find it helpful to consider questions such as:
- • What participant need or plan objective is this addressing?
- • How does this fit within our current plan design?
- • What are the costs, tradeoffs, and operational impacts?
- • How will we evaluate whether it is successful?
- • Are there other approaches that could also address the issue?
This type of analysis helps make sure that decisions are driven by plan-specific considerations rather than general market direction alone. The key consideration is not whether a feature is widely adopted, but how effectively it aligns with the needs of the plan’s participants.
In many cases, committees are already evaluating this through discussions about participation levels, savings behavior, investment outcomes, and overall plan objectives.
The role of the fiduciary process is to connect those goals to potential solutions and determine whether a given strategy is the right fit.
The Difference Between Benchmarking and Copying
Benchmarking can be a useful fiduciary tool. Understanding how similar plans are structured can provide context and help committees identify opportunities for improvement. The risk arises when benchmarking becomes copying.
A prudent committee may review industry data and conclude that a trend aligns with participant needs. An imprudent committee may implement the same change solely because competitors have already done so. The distinction may seem subtle, but from a fiduciary perspective it is significant. One approach involves analysis and decision-making, while the other relies primarily on imitation.
Fiduciary Decisions Should Be Problem-Driven
The strongest fiduciary decisions typically begin with a clearly defined problem. For example:
- • Participation rates are below expectations.
- • Participants are not on track for retirement.
- • Investments are underperforming.
- • Plan fees are unreasonable or unnecessary.
Once the problem is identified, committees can evaluate potential solutions and determine whether a particular industry trend addresses the issue. This process helps make sure that decisions remain focused on participant outcomes rather than industry momentum.
What Would a Prudent Process Look Like?
When evaluating any industry trend, committees should document:
- • The issue being addressed
- • The alternatives considered
- • The expected participant benefit
- • The costs and potential drawbacks
- • The rationale for the final decision
In addition, prudent governance practices such as regular committee meetings, fiduciary training, documented meeting minutes, periodic fee reviews, and the use of qualified service providers can help support a strong decision-making process. These practices help demonstrate that the committee is evaluating decisions thoughtfully rather than simply adopting ideas because they have become popular elsewhere.
The documentation process demonstrates that the committee followed a decision-making process grounded in analysis and consideration of relevant factors. In many cases, the integrity of the process is just as important as the resulting decision.
The Bottom Line
Industry best practices can be valuable sources of ideas, but they are most effective when evaluated within the context of a plan’s specific goals and participant needs.
Retirement plan committees are responsible for assessing whether a strategy, feature, or service is appropriate for their unique plan design and workforce. This includes understanding how it aligns with participant outcomes, plan objectives, and overall fiduciary considerations. A strong fiduciary process brings together analysis, independent evaluation, and a focus on participant outcomes to guide these decisions.
Ultimately, the objective is not to mirror other plans, but to design and maintain a plan that supports the needs of your participants.
