Fresh off the announcement of Boeing’s settlement for its alleged 401(k) fiduciary breach, and still basking in the glow of his win before the Supreme Court in Tibble v. Edison International, lawyer Jerry Schlichter of St. Louis-based Schlichter, Bogard & Denton announced he’s filed another lawsuit.
This time it’s against third-party human resources provider Insperity, and the 50,000 participants in its plan.
The complaint alleges that Insperity breached its fiduciary duties by causing the 401(k) plan’s participants to pay millions of dollars in excessive recordkeeping fees to Insperity’s proprietary subsidiary, Insperity Retirement Services.
The excessive investment management and recordkeeping fees, as well as the performance losses from investing in overly expensive funds, cost participants millions of dollars of their retirement savings, according to the filing.
“We allege that Insperity and Reliance Trust have breached their fiduciary duties under the law, duties that exist for the protection of the employees and retirees,” Schlichter said in a statement. “The employees and retirees, who lost money from their retirement savings because of the mismanagement of their plan, are entitled to justice.”
The complaint states that the Insperity 401(k) Plan failed to engage in a competitive bidding process for a plan recordkeeper. Rather than soliciting competitive bids from outside recordkeepers, it simply chose Insperity Retirement Services.
The complaint also alleges that Insperity chose mutual funds and collective trusts with high expenses and poor performance, excluding lower-cost share classes of the identical mutual fund investments.
Lastly, the complaint accuses Insperity of breaching its fiduciary duties by failing to adequately monitor the plan. As a consequence of this breach, the plan suffered substantial losses through excessive fees and underperforming investments, Schlichter claims.
The Insperity 401(k) Plan, as of December 31, 2014, had over $2 billion in total assets, which places it in the top 0.08% of the roughly 621,000 401(k) plans offered in the United States, according to data from BrightScope.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
