A participant in the Nestle 401(k) Savings Plan claims Voya is acting as little more than a conduit between the plan and Financial Engines, the country’s largest RIA founded by Nobel Prize winner Bill Sharpe.
Fees charged by Voya, they add, provide no additional value over and above what participants could do for themselves, and apparently stem from Voya simply offering access to Financial Engine’s services.
“There is no rational justification for an asset-based fee for the minimal fixed level of service Voya provides in connection with FE’s investment advice program, which is little more than simply making the program available,” according to the filing.
For example, it states the level of Voya’s services to a participant who chooses to use Financial Engines’ service “does not increase when that participant’s account has grown through additional contributions or investment gains, yet Voya’s fee will increase in proportion to the increase in the value of the account.”
Likewise, according to the complaint, Voya provides no greater service to one plan participant whose account value invested through Financial Engines is $50,000 than to another plan participant whose account value is $75,000, yet Voya’s fee for the latter participant’s account is materially greater than the fee for the former’s account.
“In fact, since the interface of Financial Engines’ advice program with Voya’s recordkeeping system does nothing more than implement investment instructions on behalf of participants in the same manner that participants directly provide investment instructions in the plans, rights that all participants have simply by virtue of their participation in the plans, Voya is doing nothing more than providing an electronic mechanism for implementing instructions the participants could implement on their own.”
Issues of so-called “self-dealing” are attracting more attention from 401(k) plan participants and lawyers acting on their behalf. In mid-August, Morgan Stanley and its board were accused of mismanaging the firm’s 401(k) retirement plan and costing 60,000 employees hundreds of millions of dollars by picking inappropriate and high-priced investments, some of which were managed for the firm’s own profit.