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.
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.)
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