Short answer: ERISA requires a fiduciary to act with the care, skill, prudence and diligence that a prudent person familiar with such matters would use. Because of the words “familiar with such matters,” it is often called the prudent expert standard: good intentions are not enough, and an employer without the expertise is expected to get it.
The statute says a fiduciary must act solely in the interest of participants and beneficiaries, for the exclusive purpose of providing benefits and paying reasonable plan expenses, with the care, skill, prudence and diligence that a prudent person acting in a like capacity and familiar with such matters would use, and in line with the plan documents.
For a self-funded health plan, prudence is judged mostly by process: getting competing proposals, understanding vendor compensation, reading contracts (including PBM and stop-loss terms), documenting why a vendor was chosen, and reviewing results periodically. A fiduciary who lacks the knowledge can meet the standard by using qualified advisers, but still has to evaluate their advice.
A broker’s or consultant’s written compensation disclosure is part of what the employer reviews to judge whether fees are reasonable.