One thing that has become common in the retirement plan industry are lawsuits regarding fees charged in 401(k) plans. Many fiduciaries assume that they can alleviate the risks of lawsuits by using low-cost or index strategies. This article mentions ERISA as an example of a plan where fiduciaries must make investment decisions based solely on the needs of the plan’s beneficiaries. When fiduciaries make investments they must act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” Fiduciaries of 401(k) plans have an obligation to provide the best service possible to the beneficiaries of the plan.
See Manning & Napier, Collective Investment Trusts: A Fiduciary Opportunity, Seeking Alpha, March 11, 2016.
