New Fiduciary Q&A:
Q: Are limited partnerships appropriate for inclusion into a profit sharing plan?
A: No investment is imprudent on its face. Having said that, we also emphasize the fact that more care must be taken by the fiduciary in the case of selecting investments for benefit plans where participants are involved. Ultimately, the decision should hinge on what is in the best interest of the participants and consider factors such as:
- Does the IPS authorize investment in the asset class represented by the LP; if not, does the IPS need to be changed?
- Are there any potential conflicts of interest that result from selecting the investment?
- Is adequate information available to do proper, objective due diligence on the LP?
- Does the fiduciary have, or is expertise available, to properly analyze the suitability of the LP as an investment option?
- Can the LP be monitored on an ongoing basis?
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If you have any fiduciary-related questions you would like to see answered in the Fiduciary Q&A, let us know by emailing blog@fi360.com or leave your thoughts in the comments below.
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