Mutual of Omaha sued over 401(k) plan fees, investment options

Mutual of Omaha sued over 401(k) plan fees, investment options
Lawsuit alleges self-dealing in the insurer's use of funds from a wholly owned subsidiary, United of Omaha.
JAN 29, 2018
A participant in the 401(k) plan of Mutual of Omaha sued the company and plan executives alleging violations of ERISA due to excessive fees and to the plan's use of proprietary funds. "The fiduciary defendants selected numerous investment options for inclusion in the plan solely to line the pockets of Mutual of Omaha at the expense of the plan and its participants," said the complaint filed last Thursday in U.S. District Court in Omaha, Neb. The complaint in Lechner vs. Mutual of Omaha et al. seeks class-action status. "It is our policy not to comment on pending litigation," Jim Nolan, a company spokesman, wrote in an email Monday. The lawsuit said Mutual of Omaha as sponsor of the plan and United of Omaha, a wholly owned subsidiary of Mutual of Omaha, failed to exercise discretion in choosing investments for the Mutual of Omaha 401(k) Long-Term Savings Plan. The plan had $772 million in assets as of Dec. 31, 2016, according to the latest Form 5500. "Mutual of Omaha received significant revenues from its wholly owned subsidiary United of Omaha arising out of this course of self-dealing," the complaint states. The 401(k) plan's menu includes "multiple United of Omaha-branded investments, each of which invests 100% of its assets into another publicly available investment fund," yet the plan charges "significantly higher fees" than is charged for the underlying funds, the complaint said. In addition, the defendants "caused the plan to overcharge" participants for non-proprietary funds in the investment menu, the complaint said. (More: In rare move, investment adviser named as defendant in NYU retirement plan case) Robert Steyer is a reporter at InvestmentNews' sister publication Pensions & Investments.

Latest News

AdvisorFinder launches AI visibility measurement tool for RIAs
AdvisorFinder launches AI visibility measurement tool for RIAs

Mercer, Focus Partners Wealth, Mariner, Creative Planning and Captrust top the leaderboard tracking AI search results for RIA firms.

Edwards Jones targets next-gen investors with hybrid investment advisory platform
Edwards Jones targets next-gen investors with hybrid investment advisory platform

"We believe this model will help younger investors – and any investors who value a hybrid advice experience,” said Ryan Robson, principal at Edward Jones.

Giant Cambridge group in Pennsylvania bolts to LPL
Giant Cambridge group in Pennsylvania bolts to LPL

Conte Wealth Advisors reportedly has $1.4 billion in client assets and 20 advisors.

MAI Capital expands in California with $551 million OG Private Wealth deal
MAI Capital expands in California with $551 million OG Private Wealth deal

The Cleveland-based RIA's latest tie-up extends the firm's national footprint into the Golden State, where opinions continue to be split over a contentious billionaire wealth tax proposal.

Advisor moves: Missouri-based LPL team decamps to Osaic in full-circle succession
Advisor moves: Missouri-based LPL team decamps to Osaic in full-circle succession

Meanwhile, Cetera has welcomed a family-run practice from Commonwealth, and a Merrill advisor joins an existing UBS team in Connecticut.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income