The plaintiffs in this case, representing participants and beneficiaries in the Nestle 401(k) Savings Plan, claim Voya Retirement Advisors (VRA) was not entitled to fees paid for online advice and managed account programs offered through Financial Engines. Thus, VRA and other defendants breached their duties and engaged in prohibited transactions violating ERISA. The case was dismissed because of the failure to prove that the defendants were ERISA fiduciaries with regard to their fees. More specifically, the service provider has ‘“no authority over or responsibility to the plan and presumably is unable to exercise any control over the trustees’ decision whether or not, and on what terms, to enter into an agreement.”’ Accordingly, Nestle had full discretion over its decision regarding its advice and managed accounts service provider. The complaint also failed to prove that the defendants were ERISA fiduciaries with regard to compensation post Nestle-VRA agreement execution. VRA and other defendants had no control over compensation, as it is a function of the number of participants with a balance in the plan and the total plan assets of participants in the program. Compensation is also dependent on plan participants’ investment decisions.
www.planadviser.com; June 22, 2017.