History lessons for today’s Plan Sponsors
In an era of ERISA litigation and heightened regulatory oversight, it is easy to forget that fiduciary duty is not new — it’s ancient. The idea that a person or persons must act solely for another’s benefit dates back more than two thousand years. Long before 401(k) plans or ERISA existed, Romans, and later, English courts, were already wrestling with what it means to hold something “in trust” for someone else. Understanding that lineage helps today’s Plan Sponsors appreciate that fiduciary duty has withstood the test of time and continues to define sound plan governance today.
The word fiduciary1 originates from the Latin words fiducia (“trust, confidence, reliance”) and fidere (“to trust”).
One of the most illustrative Roman arrangements, fiducia cum amico2 (“trust with a friend”), closely resembles the duties Plan Sponsors shoulder today. When a Roman noble traveled abroad, he might entrust his valuables or land to a fiduciarius (a trusted friend) for safekeeping. That friend held legal title but had no beneficial ownership. In fact, they were not entitled to profit from the property and had to return it upon request. This early structure mirrors a modern fiduciary’s duty of loyalty, in which the assets may be under your control but are never used for your personal benefit.
Centuries later, English courts transformed those concepts of loyalty into enforceable duties under equity law. One landmark case, Speight v. Gaunt (1883)3, established the “prudent person” standard still echoed in fiduciary law today. In that case, trustees hired a broker who absconded with funds. Because the trustees acted with ordinary business prudence, the court held they were not liable for the loss. The takeaway from this decision is that fiduciaries are judged not by outcomes but by process. This emphasis on process is clear in modern plan governance best practices, such as Fiducient Advisors’ Fiduciary Governance Calendar.
When Congress enacted the Employee Retirement Income Security Act of 1974 (ERISA), it embedded centuries of fiduciary tradition into federal law. Under ERISA §404(a)(1)4, fiduciaries must:
As the Department of Labor’s fiduciary guide5 notes, these are practical governance principles — not academic ideals. They define the daily work of prudent Plan Sponsors.
Even after centuries of legal evolution, fiduciary missteps remain remarkably consistent, as they tend to arise not from market turbulence, but from governance gaps. Two modern cases illustrate this perfectly.
In Tussey v. ABB, Inc. (8th Cir. 2014; settled 2019)6, one of the most publicized 401(k) lawsuits to date, employees alleged their Plan Sponsor allowed excessive recordkeeping fees, unmonitored revenue sharing and used plan assets to subsidize corporate expenses. After years of litigation, the case settled for $55 million, but the real lesson isn’t the price tag. A fiduciary process that includes essential safeguards such as benchmarking, fee documentation and periodic vendor reviews is designed for your best protection.
Tibble v. Edison International (U.S. Supreme Court, 2015)7 reinforced the idea that fiduciary duty isn’t “set it and forget it.” The Supreme Court held that plan fiduciaries have an ongoing duty to monitor investments, even long after they’re initially chosen. In practical terms, once a fund is in your lineup, it stays under your microscope. Regular due diligence, fee comparisons and performance reviews aren’t just best practices, they are legal expectations.
From Tussey to Tibble, fiduciary breaches rarely stem from bad markets; they almost always arise from weak process or documentation. It’s not about perfection; it’s about prudence.
For today’s retirement Plan Sponsors, ancient fiduciary duties remain alive. They have simply been updated for modern investment menus, service providers and participant behavior.
You can embody the fiduciarius mindset through these practices:
Do you want to strengthen your fiduciary process or enhance your defined contribution plan governance? Consider partnering with an independent fiduciary consultant. Please reach out to any of the professionals at Fiducient Advisors.