Article Key Takeaways

This article explains why private equity ownership and fiduciary duty are structurally incompatible and what retirement plan sponsors should be asking before hiring or retaining a PE-backed advisor.

Further:

• Fiduciary duty requires a single, clear obligation. When an institution is owned by an entity with competing financial priorities, long-term beneficiaries are structurally disadvantaged.

• Private equity ownership creates inherent incentive conflicts for fiduciaries. PE firms are legally obligated to maximize returns for investors, often on a fixed timeline that can conflict with institutional sustainability.

• The Crozer Health collapse shows how dual obligations fail in practice. Value extraction and unresolved pension liabilities left workers, retirees, and communities absorbing the losses after the owner exited.

• These risks extend to retirement plan advisors and service providers. As private equity consolidates the advisory industry, ownership can affect resourcing, compensation structures, and service quality.

• Plan sponsors have a fiduciary duty to evaluate advisor ownership and incentives. Understanding who owns your advisor, how they are paid, and what pressures shape their decisions is part of prudent oversight.

• Fiduciary duty is not a marketing claim, it’s a structural commitment. Conflicted ownership models often produce quiet but material harm over time, including higher fees, weaker outcomes, and diminished service.

Full Article

In 2016, Prospect Medical Holdings acquired Crozer Health, a Delaware County, Pennsylvania health system that had served the community for generations, for $300 million. Prospect pledged to keep the system open for at least a decade. Nine years later, it declared bankruptcy. Four hospitals closed. More than 3,000 healthcare workers lost their jobs. Delaware County lost its only trauma center and burn unit. And the pension fund for Crozer-Keystone employees, underfunded by an estimated $150 million, was handed over to the Pension Benefit Guaranty Corporation, the federal agency that serves as the backstop of last resort for failed private-sector pension plans.

What happened between 2016 and 2025 is instructive. Prospect sold Crozer's hospital real estate to a REIT, then leased it back, thereby burdening the system with over $200 million in debt obligations against the properties it once owned outright. It failed to address mounting pension liabilities. When the math stopped working, Prospect filed for bankruptcy and, in the words of a Delaware County Council Chair, "cut and ran back to California."

I'm not writing this as a postmortem on a Pennsylvania health system. I'm writing it because this story is a clean illustration of something I think about every day in the retirement plan space: what happens when a fiduciary institution is owned by someone whose obligations run in a fundamentally different direction.

Fiduciary Duty Requires a Single Master

A hospital owes a duty of care to its patients. That duty is not aspirational; it is the organizing principle of the institution. Every resource allocation decision, every staffing call, every capital investment should be filtered through the question: Does this serve the people in our care?

Private equity firms owe a duty to their limited partners. That duty is also not aspirational. It is a legal and contractual obligation. PE funds exist to generate returns, typically within a defined investment horizon. That's not a criticism; it's simply what they are.

The problem is not that either obligation is wrong. The problem is that they are incompatible when held simultaneously. In Crozer's case, the pension fund and the communities it served lost that argument to a capital structure that prioritized the extraction of value to investors over institutional sustainability.

This Isn't Just a Healthcare Problem

The retirement plan advisory industry is undergoing a similar structural shift. Over the past decade, private equity has moved aggressively into the registered investment advisory space, acquiring retirement plan consulting firms, recordkeepers, and third-party administrators. This consolidation trend has been widely documented, with platform-style organizations expanding rapidly through acquisitions fueled by institutional capital.

A retirement plan advisor who serves as a fiduciary to plan sponsors and participants has a legal obligation to act in the interest of those beneficiaries. Full stop. But when that advisor is owned by a PE-backed enterprise operating on a five-to-seven-year investment horizon, the questions worth asking are the same ones that were eventually asked too late in Delaware County:

When resources get constrained, whose interests drive the decisions? When advisor compensation structures are redesigned post-acquisition, what changes and why? When organic growth slows and the exit timeline tightens, what gets monetized and at whose expense?

These aren't hypothetical concerns. They're the natural outputs of a dual-obligation structure, and in industries built on trust, dual obligations have a way of producing singular losers.

What Plan Sponsors Should Be Asking

Clearly, every PE-backed advisory firm is not destined to become a cautionary tale. However, plan sponsors, who are themselves fiduciaries, have an obligation to understand the ownership structure and incentive architecture of the advisors they hire. That obligation isn't optional; it's embedded in the prudent expert standard.

A few questions worth pressing on:

1. Who owns your advisor, and what are their investment objectives? If the answer is a PE fund, ask when that fund was raised and what its expected holding period is. Private equity funds are typically defined by a finite investment time horizon with an expectation that holdings are liquidated at tsome point to return capital to its investors. You deserve to understand whether your advisor relationship is being managed for the long term or positioned for a sale.
2. How has ownership changed what gets resourced? Acquisitions frequently produce cost synergies, which is a polished term for cuts. When the people who built the relationship leave, or the specialized expertise that won your business gets consolidated into a national service model, that's a material change worth documenting.
3. Where does your advisor's revenue actually come from? Conflicts of interest are not self-disclosing. Understanding whether your advisor is fee-only, revenue-sharing, or compensated through affiliated platforms is foundational.

The Lesson From Delaware County

The workers at Crozer-Chester Medical Center didn't lose their pension because of bad luck. They lost it because the institution that owed them a duty of care was controlled by an entity whose primary obligation ran to someone else.

The Crozer story is dramatic because its consequences are visible: closed hospitals, displaced workers, and a federal agency stepping in to honor promises a private company wouldn't keep. In the retirement plan world, the consequences of conflicted advisory relationships are usually quieter. A plan that underperforms. A fee structure that persists longer than it should. A service model that thins out after the integration is complete.

Quieter doesn't mean smaller. It means it's harder to trace back to its origin.

Fiduciary duty isn't a marketing claim. It's a structural commitment. Plan sponsors who understand that distinction are better positioned to build advisory relationships that actually hold. The ones who don't are taking on a risk they may not recognize until it's too late to do much about it.

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.