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Advisors

Avoiding ERISA Lawsuits Isn’t Hard

Proposed class action lawsuits by retirement plan participants against their own employers are on track for a fivefold increase between last year and this year, according to a Bloomberg Law analysis. Sixty-five class action suits have been filed so far in 2020 and many of these suits are for excessive fees and/or the use of overpriced share classes. Several employers have been sued multiple times (e.g. Quest Diagnostics, Cerner Corp, Omnicom Group). Startlingly, some of the employers are large money management and plan recordkeeping firms (e.g. INVESCO, Goldman Sachs, BlackRock, Mutual of Omaha, Fidelity – multiple times). Talk about a fox guarding the hen house!Moreover, these lawsuits are being brought against smaller plans (e.g. Greystar Management Services - $188M plan) and to other participant driven plans like 403(b)s (e.g. Mercy Health, University of Miami). After all, ERISA and the duty to pay only reasonable fees applies equally to qualified plans of all sizes and flavors. Sure, many of these lawsuits can be explained by the fact that the case law is maturing (providing a blue print for action) and that participants are more knowledgeable and attuned to fees now that the expense curtain has been pulled back somewhat. Today, there

Wiz Bang Participant Websites Not a Panacea

We couldn’t agree more! Judy Ward’s terrific article in the May/June edition of PLANADVISOR Magazine hits the nail on the head. Entitled “High Tech Meets High Touch,” the article illustrates how thoughtful advisors blend technology and coaching to successfully engage plan participants. Bemoaning the fact that many service providers spend millions on their retirement calculators and participant websites, only to find that less than 20% of participants even log on to their site once a year, Ms. Ward interviewed a number of successful retirement plan advisors to find the balance between technology and touch. James Lyday, managing director of Pensionmark Nashville is representative of the others interviewed for the article. Everyone thinks participants need snazzy feature such as gamification to get motivated to engage. “A customized retirement income illustration is by far the home run to engage people,” says Lyday, a 2019 PLANSPONSOR Retirement Plan Advisor of the year finalist. Indeed, most participants need real help from a trusted advisor in translating their retirement outlook data into an action plan to improve their situation. Based on her interviews, Ms. Ward puts forth four simple ideas for how to blend technology and touch to build participant engagement: demystify the website calculator, narrow the financial