Fidelity faces Galvin inquiry over fees charged for 401(k) plans

Fidelity faces Galvin inquiry over fees charged for 401(k) plans
Massachusetts' Secretary of the Commonwealth joins the Labor Department in questioning charges some mutual funds face for using Fidelity's platform.
MAR 04, 2019

Fidelity Investments is facing more scrutiny over fees it charges some mutual funds for using its platform to access retirement plan customers. The Massachusetts Secretary of the Commonwealth said its securities division sent a letter last Wednesday to Boston-based Fidelity requesting information about those fees. The inquiry follows a Feb. 21 lawsuit against Fidelity by an investor in T-Mobile USA Inc.'s 401(k) plan that claims the firm conceals so-called infrastructure fees. The fees are also being probed by the Labor Department, the Wall Street Journal reported last week. A spokesman for the Department of Labor said the agency declined to comment on that report. The Secretary of the Commonwealth's office declined to provide a copy of the letter but said in an email to Bloomberg it has requested the following information: • Identity of all Massachusetts pension and retirement plans for which Fidelity is a fiduciary or service provider. • Details of all fees payable by funds to Fidelity. • Description of the infrastructure fee payable by funds on the network. • Identity of Fidelity units that receive the fee. • Whether the fee is disclosed to investors, and if so, how the disclosure is provided. Fidelity spokesman Vincent Loporchio said that the company doesn't comment on communications with regulators. He said in a statement last week that the "infrastructure fee has been fully disclosed to 401(k) plans and their sponsors via a disclosure that Fidelity sent to over 20,000 401(k) plans." Fidelity denies the lawsuit's allegations and will vigorously defend itself, Mr. Loporchio said. The state securities division is overseen by Secretary of the Commonwealth William Galvin, who has played a key role in policing the mutual fund and securities industries. In 2002, Mr. Galvin's office, along with then-New York Attorney General Eliot Spitzer, played a key role in probing whether Wall Street firms misled investors with biased investment research. In an agreement with state, federal and industry groups several firms agreed to pay $1.4 billion to settle such claims. Fidelity had $2.4 trillion in assets under management as of Dec. 31. (More: Are the economics of active management becoming unsustainable?)​

Latest News

Cerulli: Advisors struggle to turn 401(k) savers into wealth clients
Cerulli: Advisors struggle to turn 401(k) savers into wealth clients

Just over 10% of advisors' wealth clients come from defined contribution plans, as capacity, data and technology gaps block the bridge to wealth

Alto to buy Forge Trust from Schwab in self-directed IRA push
Alto to buy Forge Trust from Schwab in self-directed IRA push

Deal creates a $20B-plus custody platform for private market investing in IRAs, months after Schwab closed its Forge Global purchase

Wall Street bonanza! The Street on track to hit a record $90 billion in profits: Report
Wall Street bonanza! The Street on track to hit a record $90 billion in profits: Report

Despite the good times, advisors should tread carefully, said one veteran industry executive.

Most workers have retirement plans but no retirement strategy
Most workers have retirement plans but no retirement strategy

Gallagher data reveals a huge gap in financial confidence between employees who work with an advisor and those who don't.

Small employers are more open to pooled retirement plans
Small employers are more open to pooled retirement plans

PEP assets hit $34bn at year-end 2025 as advisors navigate mandate deadlines and a 48% employer interest rate.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor