Treichel Discusses 401(k) Fee Lawsuits Alleging Recordkeepers’ Alternative Revenue Methods Could Cost Participants Money

In a Wall Street Journal article published today, May 8, 2019, our senior consultant Bonnie Treichel had an opportunity to share her thoughts on the trend of reduced recordkeeping costs driving financial services companies to seek alternative methods for generating revenue outside of traditional administrative fees.

This is a topic our firm has written on extensively over the last year, and now we are seeing a few recordkeepers’ methods of generating revenue from retirement plans landing the plan sponsors utilizing their services in court.

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The article specifically addresses the 403(b) retirement plan fee case against Vanderbilt University and the plaintiffs’ proposed $14.5 million settlement that would “require the university to bar Fidelity Investments, its current record-keeper and the nation’s largest for 401(k)s, from “using information about Plan participants…to market or sell products or
services unrelated to the Plan” and to “contractually prohibit” future record-keepers from such

While the outcome of this case is still outstanding, Bonnie noted in the article that if this settlement is approved by the court, it may prompt employers (and their plan sponsors) to consider barring their recordkeepers from cross-selling their products to participants.

To read the complete Wall Street Journal article, please click here. (Note: The WSJ does require a subscription to view the full article.)

Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.   Investments involve risk and, unless otherwise stated, are not guaranteed.  Multnomah Group does not provide legal or tax advice.  Any views expressed herein are those of the author(s) and not necessarily those of Multnomah Group or Multnomah Group’s clients.

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