The most prolific 401(k) litigator has a message for companies with pensions: If you're offloading plan assets to an annuity, put the best interests of the participants first.
Earlier this week, Jerry Schlichter’s law firm filed a case against Lockheed Martin over its choice to hire Athene Annuity and Life Co. for pension risk transfers. That lawsuit came just a day after a separate one was filed against AT&T and State Street Global Advisors by a different group of litigators.
And chances are that more – if not many more – lawsuits will soon follow.
As of Friday, Schlichter Bogard had brought the single case against Lockheed. In an interview, the firm's founder and managing partner Jerry Schlichter said “no comment” about whether additional lawsuits on pension risk transfers are in the works.
“They breached their fiduciary duty by selecting Athene in this situation. But each case is on its own merits,” he said. “This Lockheed case is the result of a long investigation.”
Compared with traditional US insurers, Athene invests in riskier assets and reinsures annuities with offshore affiliates, the plaintiffs in the case allege. Athene, which is not a party in the lawsuit, has disputed the allegations that it was a suboptimal choice to be the group annuity provider for pension-risk transfers.
A Lockheed spokesperson said in an email that the company generally does not comment on pending litigation.
“We are serious about the allegations and intend to proceed vigorously,” Schlichter said. “Every plan sponsor who considers doing a pension risk transfer has to follow a single beacon, and that beacon is the best interests of the plan participants – the guiding principle of ERISA.”
Schlichter is well-known in the defined-contribution plan world for his work pioneering excessive-fee lawsuits against retirement plan sponsors and service providers. When asked about similarities he sees between the cases he has been pursuing over nearly two decades and the one recently filed, he pointed to fiduciary status.
“Both areas of litigation involve an underlying claim of fiduciary breach by the plan sponsor to the participants by not acting in their exclusive interest and causing them harm,” he said. “Obviously, this is a defined-benefit plan situation rather than a 401(k) or a defined-contribution plan, but the underlying fiduciary breach and the allegations about that are a result of failure to work for the sole benefit of participants. There are similarities in both.”
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
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
