Jerry Kalish has a terrific post, drawing on a law firm white paper, about the potential ERISA liabilities of financial advisors and others who manage or otherwise help to run company 401(k) plans. As he discusses, class action lawsuits are being filed alleging ERISA violations in the operation of such plans; the suits stem from the decisions made by plan advisors and others concerning plan investments and the effect of those decisions on plan expenses.
Substantively, these types of suits raise interesting questions as to exactly how much discretion in making investment decisions should be extended to administrators, sponsors and advisors of such plans before second guessing becomes appropriate. On a broader note, these suits also point out the extent to which the simultaneously high and somewhat amorphous standards that govern the actions of fiduciaries under ERISA make the responsibilities and potential liabilities of 401(k) administrators, sponsors and advisors a fertile field for imaginative plaintiffs’ lawyers.
And finally, given the number of different advisors and other players involved in the operations of these types of retirement vehicles, there are bound to be plenty of fiduciaries – as that term is understood in the context of ERISA – involved in almost any 401(k) plan, making for plenty of targets for such suits.