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Jerome Schlichter; Luke Skywalker or Darth Vader?

Jerome Schlichter; Luke Skywalker or Darth Vader?

This excellent article by Darla Mercado provides background and commentary on Mr. Schlichter, founder of St. Louis based Schlichter Bogard and Denton. He is well known within the 401(k) industry for launching (and winning) a volley of lawsuits against 401(k) plan sponsors and providers, focused mostly on breach of fiduciary duty in the form of excessive fees and funds that are not in the plan participant’s best interests.

Whether you think he is Luke or Darth likely depends on where you sit, but there are still way too many high-fee, suboptimal plans out there. This is the logical end-stage of the 40(k) bundled business model where plan sponsors can get “free” recordkeeping, compliance and participant services if they use the bundled provider’s investment funds. No matter what you think of Mr. Schlichter he is getting results.

“In a sense, the firm has substituted itself for the regulators,” Mr. Reish said. “By that, I mean that the level of compliance and good fiduciary practices today—especially on revenue sharing—is higher than it’s ever been before. I wish it happened differently, however.”

Here at Northwest Plan Services, we are strictly fee-for-service and full-disclosure. That means we think Mr. Schlichter is closer to Luke than Darth, since we are always advocating for low costs and full fee transparency.