Pentegra sells 3(16) services and so it's no surprise that Swisher thought my question was off-base. In fact, he was right to object, because if done correctly, with the right provider, a sponsor can find plenty of help and relief in a 3(16) arrangement.

On the other hand, things also can and do go terribly wrong, and that was the reason for my question.

Plan sponsors for years have shared fiduciary duty by outsourcing to a 3(21), meaning someone who recommends a menu of investment choices. They also can hand over investment selection and management duties by using a 3(38) service provider.

Now, increasingly, sponsors are turning to 3(16) services to offload the job of selecting and monitoring trustees and other service providers, investments,  as well as the investment adviser to their plans.

It's, like, the ultimate sponsor solution — if done right.

Whether you're a fan or not, we can all agree that the buyer should always beware and that, in life, you get what you pay for.

Along those lines, Swisher loathes the "amateurish, idiotic sales pitches put forward by knowledge-less salespeople" pushing 3(16) services on clueless prospects.

It's "damaging to all of us," he says with exasperation that's loud and clear.

Pentegra is a sophisticated company staffed, I assume, by some of the best and brightest. It should be more than capable of delivering the full array of 3(16) services available without flubbing a single one.

The problem is lots of small plan sponsors can't afford Pentegra.

Or they sometimes get stuck with guys like Matt Hutcheson, the Idaho-based trustee and fiduciary who is now serving more than 17 years in prison and was ordered to pay his victims $5.3 million in restitution.

According to the indictment against him, Hutcheson misappropriated about $2 million from his client's plan. He used the money to renovate his home, to repay personal loans, to purchase luxury automobiles and the like.

This is why Presidium Retirement Advisers President Anne Comer – who will be opposing Swisher on the CFDD panel – is so concerned about 3(16)s.

"We need separation of duties to help prevent fraud. A 3(16) is all-too-powerful. They can do whatever they want. There's too much concentration of power in a 3(16)," Comer says.

In a point that cannot be overstated, Comer adds that most plan sponsors just don't have a clue.

In her opinion, "if you have a good TPA and a 3(38), there's not a lot whole lot of need for a 3(16)."

Swisher, naturally, disagrees. While he readily acknowledges that there are schlocky 3(16) service providers, he says sponsors can, in fact, be released of fiduciary liability by retaining a 3(16) so long as they take care in selecting and monitoring their vendor. You can't get that from a 3(21) or a 3(38).

Swisher says he does, in fact, worry about the little guy. "If you're a tiny employer you need more help than anyone, but you can't afford it," he says. "That's a dilemma."

But Swisher is more concerned by "misrepresentations" that 3(16) services can't really give sponsors what they crave most: freedom from fiduciary liability.

"The devil is in the details," he said. "There are plenty of people (offering 3(16) services) who have no business doing this. They're the ones who don't release their contracts for review. So, yeah, there's a bit of the Wild West going on here.

"But the primary reason for disagreement on this question is unfamiliarity with the law. Even those of us who know this stuff make mistakes. But you just have to read the law. It's right there [in ERISA Section 405(a)]. So the premise that you can't release anyone from fiduciary liability, that is patently false."

OK, so what's the bottom line?

In my view, it's that the right 3(16) can really help, so long as you can afford it. Otherwise, be careful.

One last point to share here: In testimony this summer to the Department of Labor's ERISA Committee, Swisher suggested that, to best protect participants, the DOL should "make a careful study of the risks associated with outsourcing and make reasoned judgments about whether any additional rules or enforcement initiatives are needed."

"When the automobile was first invented, it was probably tough to find a good mechanic, but that didn't mean cars were a bad idea," Swisher testified.

Perhaps I'm reading too much into it, but his recommendation to the DOL and his testimony sound as if they contain strands of my concerns.