What is a 'Qualified Professional Asset Manager - QPAM'

A qualified professional asset manager is a registered investment advisor that helps institutions like pension funds make investments.

The criteria for qualifying as a QPAM are defined by the Employee Retirement Income Security Act (ERISA). Regulated institutions such as banks and insurance companies may qualify as a QPAM. Under amendments that came into effect in August 2005, a QPAM is also defined as a registered investment adviser with client assets under management of at least $85 million, and shareholders' or partners' equity in excess of $1 million.

Breaking Down 'Qualified Professional Asset Manager - QPAM'

The QPAM exemption is widely used by parties who conduct transactions with accounts holding retirement plan funds. Essentially, the QPAM exemption allows an investment fund that is managed by a QPAM to engage in a wide range of transactions that would otherwise be prohibited by ERISA with practically all parties in interest such as plan sponsors and fiduciaries. However, such transactions cannot be entered into with the QPAM itself or with those parties that may have the power to influence the QPAM.

One big role for QPAMs is representing pension plans when they want to engage in private placements. Their role is to vet the private placement. Qualified professional asset managers may also assist institutions with investments in real estate or other nontraditional or alternative investments.

QPAMs and Prohibited Transactions

A Qualified Professional Asset Manager may make a transaction that would normally be prohibited under ERISA (section 406(a). Such transactions may include sales, exchanges, leases, loans/extensions of credit and the provision of services between a party of interest and a pension plan. Using a QPAM can remove the risk of trustees being held personally liable for errors as long as they utilize the QPAM prudently. However, using a QPAM in not a shield for breach of fiduciary duty.

QPAM Qualifications

The qualifications for a Qualified Professional Asset Manager are codified in Prohibited Transaction Class Exemption 84-14 issued by the Department of Labor. They are:

  • The QPAM must be a bank, savings and loan or insurance company with equity capital or net worth in excess of $1 million of a registered investment adviser with assets under discretionary management in excess of $85 million and equity in excess of $1 million.
  • The counterparty must not be the QPAM or related to the QPAM or to the fiduciary appointed the QPAM (i.e., decided to invest in the fund).
  • The asset manager must represent in writing to the client that it is acting as a fiduciary.
  • The QPAM must negotiate the terms of the transaction and decide on behalf of the plan whether to engage in the transaction.
  • The QPAM may not have been convicted of certain activities that could bear on financial trust.


  1. Qualified Trust

    A qualified trust is a tax-advantaged fiduciary relationship ...
  2. Benefits Payable Exclusion

    A benefits payable exclusion is an insurance policy clause that ...
  3. Transaction Costs

    Transactions costs are the price paid to trade a security, such ...
  4. Portfolio Plan

    A portfolio plan is an investment strategy that guides the allocation ...
  5. Investment Manager

    An investment manager is a person or organization that makes ...
  6. Suitable (Suitability)

    A suitable investment meets a firm's, and often legal, criteria ...
Related Articles
  1. Financial Advisor

    How Do Pension Funds Work?

    Traditional private pension funds are well regulated by the government through ERISA and the PBGC. Alternative investments are aiding portfolio returns.
  2. Financial Advisor

    Identifying a Breach of Fiduciary Duty

    Pension fund managers are not the only entities owing a fiduciary duty to stockholders. Corporate officers and directors have key fiduciary roles.
  3. Investing

    A Brief Guide To Institutional Investing

    Institutional investors are organizations that manage assets on others' behalf. They include pension funds, investment companies, insurance firms, endowments and private foundations.
  4. Retirement

    403(b)s Among Plans Not Covered by New Fiduciary Rule

    Some retirement plans, including 403(b)s, are not covered by the DOL's new fiduciary rule. Here's what it means.
  5. Small Business

    Protecting Your Employees' Benefits as a Fiduciary

    Employers who provide benefits to their employees have a fiduciary duty to protect those benefits.
  6. Retirement

    The Fiduciary Rule Delay: Why Does It Matter?

    The fiduciary rule has faced a rocky road to implementation. This is where it stands now.
  7. Small Business

    The New Risks 401(k) Plan Sponsors Face

    New regulations regarding fiduciary duties means 401(k) plan sponsors need to step up oversight.
  8. Investing

    Introduction To Institutional Investing

    Investopedia explains: Learn about institutional investing and all of the major players in this field.
  9. Financial Advisor

    Choosing A Financial Advisor: Suitability Vs. Fiduciary Standards

    Discover the differences between the Suitability and Fiduciary Standards when hiring a financial advisor.
  10. Financial Advisor

    Why Fiduciary Rule is Good News for Small Plans

    Under the new fiduciary rule small business owners may be subject to less risk for the plans that they sponsor. Here's why.
  1. What is the purpose of the Volcker Rule?

    Learn about how the Volcker rule prohibits banks from engaging in certain activities, such as proprietary trading and having ... Read Answer >>
Hot Definitions
  1. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  2. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  3. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  4. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  5. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  6. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Trading Center