401(k) plan participants sue Home Depot over alleged fiduciary breaches

Lawsuit also names Financial Engines and Alight, both providers of financial advice to the plan

Apr 13, 2018 @ 11:21 am

By Robert Steyer

Two participants in Home Depot Inc.'s 401(k) plan have sued plan executives alleging that excessive fees and poor-performing investments represented a breach of their fiduciary duties under the Employee Retirement Income Security Act.

The participants also sued Financial Engines and Alight Financial Advisors, both providers of investment advice to the plan, alleging ERISA violations.

Home Depot DC plan executives "allowed participants to pay unreasonable fees to the plan's 'investment advisers,' first Financial Engines and later AFA (Alight Financial Advisors)," said the complaint filed Thursday in a federal district court in Atlanta.

"Financial Engines did almost nothing to earn these fees," said the complaint in the case of Pizarro and Smith et al. vs. Home Depot Inc. et al., which is seeking class-action status. "Since Financial Engines simply offered a robo-advisory service with cookie-cutter portfolios, its costs are minimal."

The 401(k) plan executives allowed Financial Engines and Alight Financial Advisors "to receive asset-based investment advisory fees but failed to monitor those payments and the services," the complaint said.

Financial Engines and Alight Financial Advisors "are parties in interest who knowingly participated in the Home Depot defendants' breaches of fiduciary duty," making them liable, too, the complaint said.

(More: Lawsuits push 401(k) plan sponsors to cut fees)

Amy Conley, a spokeswoman for Financial Engines, did not return a request for comment.

"We haven't seen the suit yet, but we're proud of the financial support and opportunities for saving that we provide our associates," Stephen Holmes, a Home Depot spokesman, said in an email.

"We do not comment on litigation," MacKenzie Lucas, a spokeswoman for Alight Solutions, parent of Alight Financial Advisors, said in an email. "Our model has always been and will continue to be fully transparent about all sources of revenue and fees we receive, so that plan sponsors and plan participants fully understand the cost of their plans."

The complaint also said fiduciaries of the Home Depot FutureBuilder 401(k) Plan "loaded the plan with several underperforming investment options" and then "failed to remove them despite years of deficient performance."

The plan had $6.5 billion in assets as of Dec. 31, 2016, according to its latest 11-K filing.

(More: Jerry Schlichter's fee lawsuits have left an indelible mark on the 401(k) industry)

Robert Steyer is a reporter for InvestmentNews' sister publication Pensions&Investments.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

Dave O'Brien: Choosing the right tech for a growing practice

When your practice reaches a certain inflection point, technology becomes even more critical. What do you need to take you and your practice to the next level?

Latest news & opinion

10 fastest-growing IBDs

These independent broker-dealers saw the biggest percentage gains in their revenue in 2017.

The unique nature of working with celebrity clients

Athletes and entertainers are just like everyone else — aside from complex tax issues, a lack of financial savvy and a need for prenups

Top 10 IBDs ranked by revenue

These independent broker dealers generated the most revenues in 2017.

8 podcasts advisers listen to when they aren't working

Listening to podcasts for the fun of it.

UBS continues to cut loans to recruits, while increasing compensation to brokers

The wirehouse reduced recruitment loans 20% and increased bonus loans 68% in the first quarter.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print