Would your company 401(k) survive a lawsuit brought by a plan participant who thought your plan was offering poor investment choices?

Last month, a former employee of Bloomberg L.P. filed a lawsuit accusing Bloomberg of violating its fiduciary duties under the Employee Retirement Income Security Act.[i]

The plaintiff, Rajappan Rajkumar, alleges that the company and its retirement plan committee violated ERISA fiduciary duties by failing to remove two mutual funds that have underperformed their benchmarks over one-, three-, five- and 10-year periods. The complaint alleges that participants missed out on hundreds of millions of dollars of gain due to the underperformance and higher fees compared to other available fund options.

You may be familiar with Bloomberg L.P. because of their financial news programs and magazines such as Bloomberg News. The company also provides financial analytics, data services, and an equity trading platform to financial institutions via the Bloomberg Terminal.

In other words, this is a company that knows a thing or two about investing, and yet here they are the defendant in a 401(k) lawsuit involving fund selection.

If a company like Bloomberg can be at risk for breaching fiduciary duties, how confident do you feel about your own 401(k)?

Could you defend your fund line-up in a court of law?

Hiring a 3(38) investment manager could be a smart move for your company.

A 3(38) investment manager is a type of investment manager who has full discretionary authority to manage and make investment decisions on behalf of a retirement plan, such as a 401(k). This fiduciary status relieves the plan sponsor of day-to-day investment decision-making and can significantly reduce their fiduciary liability.

A 3(38) investment manager is a fiduciary. It is their job to select, monitor, and benchmark funds and ensure that everything is managed in the best interests of the participants. They are not merely giving advice but actually have discretion to manage the plan investments.

Not only can this allow business owners to outsource their risk but hiring a 3(38) fiduciary comes with other potential benefits such as increased investment expertise and saving the business owners time and stress.

If you don’t have a 3(38) working on your 401(k), or if you’re not sure, give us a call!

Beacon Wealth Consultants serves as the 3(38) investment manager for all our Kingdom(k) plans. The Kingdom(k) is a 401(k) retirement plan designed with Christian business owners in mind, allowing business owners to offer a compelling and helpful employee benefit that also includes our faith-based portfolios in the fund line-up.

Download a brochure or give us a call today to learn more! (540) 345-3891

[i] https://www.planadviser.com/bloomberg-hit-with-401k-mismanagement-complaint/