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How the future of the 401(k) industry may hinge on the outcome of a lawsuit brought by Fidelity employees against their own company

The legal case is built on a Fidelity-only funds menu but the Boston 401(k) king intends to show these participating employees got a sweet, fair deal that went beyond DOL mandates

Author Lisa Shidler October 17, 2013 at 6:12 AM
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Fred Reish: It doesn't look good.

401(k) Stories

fiduciary Advisor Advocate

fiduciary Advisor Advocate

October 17, 2013 — 12:45 PM

No one ever accused me of being a cerebral giant so I am not sure I completely understand the basis of the lawsuit. But if I interpret the information correctly this is based on Fidelity’s standing as a plan sponsor rather than service provider. It seems that a negative outcome for Fidelity would be a dent in their business but the real lesson is the role, responsibility and potential liability of the fiduciary. If that is the case then every plan sponsor, adviser, Board member, Treasurer, CFO, Director of a foundation etc. or anyone involved in overseeing assets managed for the benefit of others should be very interested.

To me, Porter’s comments are spot on- it is difficult to say the 'every Fidelity fund sucks’ but you sure can question the process which led to those funds and share classes being included. This is at the core of the Fiduciary’s charge- and it doesn’t matter if you are Fidelity or Flintstone and Rubble- the Fiduciary has the same charge. The observation I might make is if you are acting in a Fiduciary capacity be sure to have a process (we call it the Fiduciary Continuum) which is well defined, demonstrated, documented and very defendable!

Mark W

Mark W

October 22, 2013 — 12:09 PM

As an ex-Fidelity employee now working for a small tech company I wish still had access to such a great and generous plan. Fidelity offered a wide range of funds (passive, managed, international, select you name it), had a generous match and made annual profit sharing contributions. This is one area where Fidelity does right by their employees and is a benefit that is far more generous than most employers.



June 26, 2014 — 12:03 AM

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TD Ameritrade
Asset Custodian
Top Executive: Tom Nally

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401k Plan Consultant, Advisory Firm
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RIA Publication
Top Executive: Rick Meigs

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