Making lemonade of legal lemons, new wave of ERISA class actions accuse fiduciaries of 'imprudently' using low-fee, high-rated funds, like BlackRock TDFs
The lawsuits against 401(k) plan sponsors also threaten every RIA and fiduciary, if underperformance becomes a legal liability, lawyers say.
Author Oisin Breen September 22, 2022 at 1:34 AM
September 22, 2022 — 12:04 PM
IMO- the real risk for 'fiduciaries' is not being able to follow/document and defend the decision making process. There is zero evidence to suggest anyone can consistently select out performing investment strategies prospectively...the Alpha Fairy comes and goes, if it exists at all. The other point, as related to TDF's misses the mark- the majority of returns (look at any academic research) comes from asset allocation and not from underlying investment choices. There's plenty of room to take action against the sponsor/advisor but what they have laid out doesn't make a lot of sense.
September 22, 2022 — 5:51 PM
Laughable, if it wasn't so sad. DOL needs to do a better job of defining "prudent investing" for the benefit of all sponsors, but again they write regulations/guidance of their own that leave far too much room for interpretation. We're on a slippery slope that leads to nowhere. I would also say that there should be some penalty for "class action" lawsuits brought that don't have merit in the judges eyes.