The plaintiffs in this case claim that the defendant, Georgetown University and two of its officers, failed to select a suitable service provider for administrative and recordkeeping services for the University’s defined contribution plans “in exchange for a reasonable amount of compensation”, in the retention of TIAA-CREF, Vanguard and Fidelity. Plaintiffs claim that the plans offered separate menus of expensive mutual funds in lieu of less expensive comparable funds of the same strategies, or even lower share classes of the same funds. At issue is also the asset-based fee model verses participant-based model, as fees paid increased with asset growth due to contributions and investment returns despite no additional services being delivered. Likewise, the revenue sharing payments increased along with asset growth adding to the compensation assumed by the recordkeepers. With regard to the investments offered, the total of 300 allegedly made it impossible for fiduciaries to properly evaluate, monitor and perform necessary due diligence. Plaintiffs ascertain that the large number of investment choices served to “insulate the fiduciaries from ERISA liability”, yet disadvantage participants as their asset allocation decision became more daunting as a result.
www.planadviser.com; February 28, 2018.
www.napa-net.org; February 28, 2018.