Here we go again. Another jumbo 401(k) plan, another lawsuit, another round of alleged fiduciary misconduct that reads like a broken record for those of us who’ve been watching this space since before fee disclosure was a thing.
This time, the target is the Stifel Financial Profit Sharing 401(k) Plan, with over $1.3 billion in assets—a big, juicy plan that allegedly fell short of its fiduciary responsibilities in a very familiar way: not acting like a prudent fiduciary when it came to fees and fund selection. The plaintiffs—five participants suing on behalf of themselves and similarly situated plan participants—claim the fiduciaries blew it. And not in a minor way, but in a way that cost plan participants millions of dollars over several years.
The central allegation? That Stifel’s fiduciaries failed to leverage their buying power as a billion-dollar plan. That they didn’t push for reasonable fees for recordkeeping and administrative (RKA) services. That they didn’t do the due diligence that ERISA demands—ongoing, objective review of the plan’s investment options to ensure they were performing and prudent.
If this sounds like déjà vu, that’s because it is.
Bargaining Power Means Nothing If You Don’t Use It
A $1.3 billion plan has negotiating clout, period. You should be able to command rock-bottom recordkeeping fees and premium service levels. But according to the suit, from 2019 through 2023, Stifel allegedly allowed unreasonable expenses to be charged to participants for RKA services. The fiduciaries, the suit claims, didn’t try to cut costs or explore lower-cost options until it was too late.
And that’s a fundamental breakdown of fiduciary responsibility. You’re not spending your own money when you’re a fiduciary. You’re spending the plan’s money. The participants’ money. That means you better act like you’re walking around with someone else’s checkbook—because you are.
Prudential, Empower, and the GIF That Keeps on Giving (to Them)
Then there’s the next layer: the investment menu. The lawsuit calls out the plan’s relationship with Prudential (now Empower), which allegedly included a stable value fund—a guaranteed income fund (GIF)—that didn’t live up to the “best available” standard.
Let’s be honest, stable value is where a lot of plan sponsors and advisors stop asking questions. They figure: “Hey, it’s stable, it’s safe, what’s to worry about?” Well, plenty—especially if you’re not paying attention to crediting rates, the underlying investment structure, and whether your participants are getting fleeced on the spread.
According to the complaint, the Empower GIF had low crediting rates, high embedded spreads (the difference between what Empower earned and what participants received), and a structure
that left participants exposed to single-entity credit risk, illiquidity, and zero transparency. Translation: Empower allegedly got rich while participants got shortchanged.
If true, that’s not just imprudent, it’s a disgrace. Selecting an investment based on ease or legacy relationships instead of participant outcomes is a surefire way to find yourself on the wrong end of an ERISA complaint. And here we are.
This Isn’t Just About One Plan—It’s a Pattern
I’m not here to say whether the allegations are true or not—lawsuits are one side of the story, and that’s always worth repeating. But if you’ve followed the pattern of fiduciary litigation over the last decade, the playbook is very familiar. Big plan. Big fees. Big service providers. And fiduciaries who either didn’t know better or didn’t care to ask better questions.
This isn’t about bad guys in the shadows, it’s about good intentions gone unchecked. It’s about fiduciaries not taking their duties seriously, or being overwhelmed, under-advised, or worse, asleep at the wheel. You can’t plead ignorance under ERISA. Fiduciary responsibility is an active duty, it’s not “set it and forget it.” It’s not “trust but don’t verify.” It’s work. Real work. And too many plan sponsors and committees don’t want to do it.
What Plan Sponsors Should Take From This
Whether you’re running a $1.3 billion plan or a $3 million startup 401(k), the fundamentals don’t change:
· Review fees regularly. Don’t wait for a lawsuit to realize you’re overpaying for basic services.
· Benchmark. Everything. Investments, recordkeeping, TPA services. You don’t know if you’re paying too much until you compare.
· Understand your funds. Especially stable value or GIC options. Just because the label says “guaranteed” doesn’t mean it’s good.
· Ask hard questions. If your providers can’t explain their fees, structures, or services, find someone who can.
Final Thought: Lawsuits Are Lessons—If You’re Willing to Learn
This isn’t the first time a mega-plan has been sued for allegedly falling asleep at the fiduciary switch, and it won’t be the last. But every one of these cases is a warning. Whether or not Stifel’s fiduciaries are ultimately found liable, the message is clear: fiduciary complacency costs money, reputations, and often your job.
So, stay tuned. We’ll see where this one goes. But if you’re a fiduciary reading this, don’t just stay tuned, get proactive.
Because in the ERISA world, “I didn’t know” has never been a valid defense.
