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.

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