The U.S. Department of Labor (DOL) released a proposed rule, Fiduciary Duties in Selecting Designated Investment Alternatives, aimed at providing additional clarity on how retirement plan fiduciaries evaluate and monitor investments. 

“This proposal highlights the importance of maintaining a consistent and well-documented process for evaluating investments,” said Kathy Peterson, CPFA™, AIF®, CRPC®, Director of Corporate Retirement Plans. “Clarity around that process helps committees make informed decisions and demonstrate they are acting in the best interest of participants.” 

In practical terms, this proposal clarifies how ERISA’s (Employee Retirement Income Security Act of 1974’s) duty of prudence applies when fiduciaries select investments for participant-directed plans and provides a safe harbor around that process. While the discussion includes alternative assets, which are investments outside traditional asset classes like publicly traded stocks, bonds, and cash equivalents and may include private equity, private credit, real estate, hedge funds, and infrastructure, the framework itself is asset-neutral. It does not require, endorse, or prohibit any particular asset class. Instead, the proposed safe harbor provides committees with a clearer and more defensible framework for reviewing issues such as fees, liquidity, valuation, benchmarking, and complexity. 

That matters because this proposal reaches well beyond private markets. It effectively says the same prudence framework should apply whether a fiduciary is evaluating a traditional menu option, an asset allocation fund with alternative exposure, or a more customized investment design. In that sense, the message is simple: process over product.  

This shift may reduce some of the uncertainty that has made many plan sponsors cautious around less traditional investments. But it does not remove fiduciary responsibility. Committees will still need to demonstrate a thoughtful process, document their reasoning, and always act in participants’ best interests. 

1. A Consistent, Asset-Neutral Approach

The proposed rule does not require, prohibit, or favor any particular type of investment. Instead, it emphasizes that fiduciaries should evaluate all permissible investment options using the same prudent process, regardless of asset class. 

What This Means: Plan sponsors retain flexibility in designing investment lineups, provided that decisions are grounded in a thoughtful, well-documented process. 

2. Reinforcing Established Fiduciary Responsibilities 

The proposal builds on the existing ERISA framework, which requires fiduciaries to: 

• Act in the best interest of plan participants and beneficiaries. 

• Follow a prudent decision-making process. 

• Maintain appropriate documentation. 

• Monitor investments on an ongoing basis. 

The rule offers additional clarity on how to carry out these responsibilities in practice, particularly in areas such as investment selection, benchmarking, and ongoing evaluation. 

What This Means: Fiduciaries should focus on consistency, documentation, and oversight as the foundation of their responsibilities.

3. Practical Guidance for Day-to-Day Governance

Rather than introducing a new framework, the proposal provides more detailed guidance that fiduciaries can apply in regular committee activities and oversight processes. 

Which can help: 

• Support more consistent evaluation practices. 

• Improve documentation of decisions. 

• Provide clearer structure for monitoring investments over time.

What This Means: Well-defined governance practices and clear records of decision-making remain central to effective plan management. 

4. Maintaining Flexibility in Decision-Making 

The proposal preserves fiduciary discretion. It does not direct plan sponsors toward or away from specific strategies or products. 

Different plans may reasonably reach different investment decisions based on their participant population and objectives, as long as a prudent process supports those decisions. 

What This Means: There is no single right investment lineup. The focus remains on how decisions are made and reviewed. 

For plan sponsors and fiduciaries, this proposal is a timely reminder of the need for disciplined governance, clear documentation, and consistent evaluation of investment options in the best interest of plan participants. These are core elements of the fiduciary investment advisory support Aldrich already provides to clients through prudent processes, ongoing monitoring, and governance guidance. 

As this proposal moves through the regulatory process, plan sponsors and fiduciaries may consider revisiting their current practices in the following areas: 

• Investment committee structure and governance procedures  

• Documentation of fiduciary decision-making processes  

• Benchmarking and investment evaluation methods  

• Consistency of ongoing monitoring practices  

• Fiduciary training and education 

This material is provided for informational purposes only and does not constitute investment, legal, or fiduciary advice. Plan sponsors should consult their advisors regarding their specific circumstances.