Aon Hewitt wins 401(k) lawsuit over robo-adviser kickbacks

It's the fourth time a retirement-plan record keeper has prevailed in a lawsuit scrutinizing fees received from Financial Engines.

Aon Hewitt has won a lawsuit alleging that it engaged in a kickback scheme with a 401(k) plan robo-adviser that inflated costs for retirement plan participants.

The lawsuit, originally filed in January 2017 on behalf of participants in the Caterpillar Inc. 401(k) plan, alleged that two units of Aon Hewitt — Hewitt Associates, which provided record keeping and administrative services, and Aon Hewitt Financial Advisors — received “improper kickbacks” from robo-adviser Financial Engines.

Aon Hewitt subcontracted with Financial Engines to provide investment advisory services to plan participants, but “did not perform any material services” in exchange for the fees Financial Engines paid to Hewitt, according to the court order, filed March 19.

Judge Jeffrey T. Gilbert of the U.S. District Court for the Northern District of Illinois dismissed the case — Scott v. Aon Hewitt Financial Advisors LLC et al — because the plaintiff failed to state a claim. The plaintiff, a retired former employee of Caterpillar, has 30 days to file an amended complaint.

Three other firms with retirement-plan record-keeping units — Voya Financial, Xerox and Fidelity Investments — beat back similar allegations in past months. The litigation comes amid the flurry of 401(k) fee-related lawsuits filed over the past few years.

Aon Hewitt sold its retirement record-keeping business to Blackstone Group last year.