- The use of multiple record-keepers – for example, the use of both TIAA and Vanguard – led to higher participant fees, because the university could not fully leverage the plan’s assets to take advantage of economies of scale and lower fees.
- The inclusion of a large number of funds in the same asset class resulted in higher fees and expenses by depriving the university of bargaining power to negotiate lower fees.
- The offer of many actively managed funds having the same management style resulted in the plan effectively having an actively managed index fund with much higher fees than a comparable passive index fund.
- The failure to monitor and remove underperforming funds, in part because of restrictions imposed by the vendor, resulted in lower returns to participants.
- By offering higher-cost retail or retirement-class mutual fund shares instead of institutional-class shares of the same mutual funds, the university failed to take advantage of negotiating power that should have been associated with a plan of its size.
- The use of multiple record-keepers and an unreasonably high number of investment options resulted in participant confusion and decision paralysis.
- The payment of administration and recordkeeping fees through asset-based revenue sharing, rather than a per-account fee, resulted in unreasonable fees not justified by the services provided.
- The failure to solicit bids from competing vendors resulted in higher fees due to the university’s failure to exercise its negotiating power.
Benefits Think Fee litigation hits higher education
By
Mary Beth Braitman, Craig Burke, Marc W. Sciscoe, Tara Schulstad Sciscoe and Christopher S. Sears
Published
4 Min Read
Mary Beth Braitman
Partner
Braitman works with governmental retirement and health systems compliance with federal law, fiduciary issues and plan design innovations.
Craig Burke
Partner
Burke concentrates his practice in the area of employee benefits, advising clients regarding employee stock ownership plans,, pension and profit-sharing plans, 401(k) plans, health and welfare plans, … Read full bio
Marc W. Sciscoe
Partner
Sciscoe represents employers of all types on matters relating to their employee benefit and executive compensation programs. He assists employers ranging from small professional corporations to large … Read full bio
Tara Schulstad Sciscoe
Partner
Schulstad Sciscoe is a partner in the Employee Benefits Group of Ice Miller LLP. She advises employers, plans and trusts with respect to the design and compliance of their employee benefit programs, … Read full bio
Christopher S. Sears
Partner
Sears is a partner in the Employee Benefits Group at Ice Miller LLP. He concentrates his practice in the field of health care and employee benefits. He assists clients design and maintain health and … Read full bio
