Getting “Schlichtered”: A rash of lawsuits hit 403(b) plans

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403(b) plans are under attack!

Over the last few weeks a rash of class action lawsuits have hit higher education.  The lawsuits have been filed by Schlichter Bogard & Denton on behalf of current and former participants.  Accusations cover a wide array of improprieties focused around fiduciaries’ failure to adhere to ERISA’s duties of loyalty and prudence.

403(b) plans, typically offered by schools or non-profits, haven’t been the source of much scrutiny or litigation–until now.  In the suits, Schlicter follows his typical modus operandi; accusing plan sponsors of paying excessive fees and holding under-performing investment options.  Interestingly, Schlicter adds a number of new accusations to the mix including;

  • Excessive fees for using multiple record-keepers instead of aggregating assets with one provider to achieve economies of scale.
  • Duplication of funds within asset classes.
  • Offering too many investment options leading participants to investor paralysis.

See the following links for additional reading:

http://www.employeebenefitadviser.com/opinion/fee-litigation-hits-higher-education

http://www.investmentnews.com/article/20160818/FREE/160819927/attorney-jerry-schlichter-opens-up-about-403-b-401-k-suits


The opinions expressed are either those of Gordon Asset Management, LLC (GAMLLC) and subject to change without notice, or were developed from sources believed to be providing accurate information. This material is not financial advice or an offer to sell any product. Past performance is not indicative of future results. This material is not financial advice or an offer to sell any product. GAMLLC reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Gordon Asset Management is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. More information about the adviser, its investment strategies and objectives is included in the firm’s Form ADV, which can be obtained, at no charge, by calling (866) 216-1920. The principle office of Gordon Asset Management, LLC is located at 1007 Slater Road, Suite 200, Durham, North Carolina, 27703.

 

 

 

 

 

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Todd Zempel, known as "Z", has over 12 years of extensive industry experience. Prior to taking over retirement plan operations for the Gordon Asset Management, Z spent a decade as a TPA and record-keeper. Z holds the Accredited Investment Fiduciary Analyst (AIFA) designation Qualified 401(k) Administrator (QKA) designation, and is a Certified Plan Fiduciary Adviser (CPFA). Z was voted one of the nation’s top 50 retirement plan advisors under the age of 40 in 2015.