5 Ways to Keep Jerry Schlichter Away from Your 401(k)
Attorney Jerry Schlichter’s track record of successful suits against 401(k) plan fiduciaries speaks for itself. But Schlichter, the Founding and Co-Managing Partner of St. Louis-based Schlichter Bogard, is equally happy offering his how-to fiduciary advice to avoid litigation in the first place. When 401(k) Specialist first interviewed him back in early 2016, he shared some tips on how to avoid ERISA litigation, which finished with the following quote that still applies today:
“The beacon that should guide any 401(k) plan advisor, as well as employer, is to operate the plan for the exclusive benefit of your employees and retirees. Follow that beacon and let that be your standard.”
During his recent interview with 401(k) Specialist, he shared the following five recommendations to keep him away from your retirement plan.
1. Establish rigorous fiduciary committees
“Make sure these are people who have a serious willingness to undertake the responsibility, and put in the time. Make sure that some people on the committee have some expertise, and if they don’t, then you need to have a consultant brought in to advise you. You’ve got to inquire and require that there be no conflicts with your consultants in their recommendations.”
2. Hold regular meetings, and make sure committees do their work
“I would suggest that they have at least quarterly meetings, and not setting them at 4 in the afternoon on a Friday, where everyone’s looking at their watch. Once they have the selection of funds in the plan, don’t put them on cruise control, not really doing any serious monitoring.”
3. Keep a close eye on plan investments
“Do some serious analysis. Are these plans continuing to perform as they should? You’ve got to look at historical performance over a period of years before placing them in the plan. If there’s a record of poor performance compared to a benchmark, then they need to consider whether to put the fund on a watch list. If it remains there for another quarter, consider removal.”
• SEE ALSO: Stifel 401(k) Plan Subject of New $134 Million ERISA Case Over Fund Performance
4. Constantly explore less-expensive options
“Keep in mind that index funds are virtually free now—Fidelity has some that are free, and so do other fund companies. If you’re going to have active management, you need to make sure those funds are performing as expected. People are taking more risk and they should have a higher return.”
5. Be very clear about how fees are charged
“What plan sponsors have to realize is that they cannot just allow asset-based charges for recordkeeping, without scrutiny. It’s not illegal to charge recordkeeping fees from the expense ratio. But if the sponsor allows that to happen, then they need to look at the charge per participant, because as assets increase or people add to their contributions in the plan, the recordkeeping fees will go up, without any more services from the recordkeeper. If they’re doing it with asset-based charges, they should limit the amount to $25 or $30 a person, and anything over that be returned to the plan and its participants.”
• EDITOR’S NOTE: The preceding is part of 401(k) Specialist’s new “Deep Dive” coverage on “How Not to Get Sued.” See the links below for additional coverage, including the main article featuring an in-depth interview with Jerry Schlichter.
- How Not to Get Sued in 2026: Part 1
- How Not to Get Sued in 2026: Part 2
- How Not to Get Sued: Lessons from ERISA Expert Witness Eric Dyson
Andy Stonehouse is a Denver-based freelance writer. His previous full-time roles include serving as editor-in-chief of Employee Benefit News and Agent’s Sales Journal, managing editor with Senior Market Advisor as well as retirement industry editor for BenefitsPro.com.