The Rosenbaum Law Firm P.C. Blog

Human Interest unveils a “401(k) Customer Experience Guarantee.” At least with those fiduciary warranties, it’s not insulting anyone’s intelligence.

The Customer Experience Guarantee includes specific, measurable service commitments, and the company said it has plans to improve guarantees year-over-year.

For plan sponsors, the commitments include:

• 100% of an administrator’s inquiry submitted through the Human Interest Support Center will receive a non-automated response within four business hours.

• 100% of a plan’s contributions will be processed within 5 business days of running payroll.

For plan participants:

• 100% of participants’ distributions will be sent to their bank accounts within 2 business days.

• 100% of a participant’s calls will be answered within 5 minutes during business hours.

• 100% of a participant’s initial inquiries submitted through the Human Interest Support Center will receive a non-automated response within four business hours.

If Human Interest doesn’t deliver on its promises, plan sponsors or participants will be compensated. If at any time these standards aren’t met, Human Interest will provide plan sponsors 50% off their next invoice, and participants will be eligible for a $25 gift card. Participants are eligible for a maximum of four successful claims per calendar year with a limit of one claim per month. For plan sponsors, the discount applies to monthly administrative and per-employee fees; the maximum cumulative discount may not exceed $5,000 per calendar year with a limit of one claim per month.

I don’t know how difficult it will be to be compensated, but this is a smart marketing tool.

Former employees of Swiss Re American Holding Corp. are suing the company and its recordkeeper, Empower, for breaching their fiduciary duties under the Employee Retirement Income Security Act (ERISA). The plaintiffs allege that they were charged excessive recordkeeping fees, faced imprudent investment decisions, and experienced the misuse of forfeiture funds.

In the case of Rusadill et al. v. Swiss Re American Holding Corp. et al. (SDNY), Empower is accused of providing improper rollover recommendations and using participant data for cross-selling activities. According to the plan’s most recent Form 5500 filing, the Swiss Re Group U.S. Employees’ Savings Plan had over 4,000 participants with account balances and assets totaling approximately $1.45 billion. The participants further allege that Empower used their data to promote its own Roth Individual Retirement Accounts (IRAs). Additionally, Empower is accused of concealing conflicts of interest among its employees, who were allegedly pressured to falsely assert that their recommendations were “personalized.” The plaintiffs claim Empower’s bonus structure incentivized employees to recommend its Roth IRAs to participants leaving the plan.

The complaint also states that Swiss Re failed to prevent Empower’s cross-selling activities by not requiring Empower to sign a non-solicitation agreement. Furthermore, the former participants contend that Swiss Re fiduciaries violated their duties under ERISA by allowing the plan to incur excessive recordkeeping fees—more than seven times the average fee for plans of similar size.

Recordkeepers and Third Party Administrators (TPAs) need to either scale up or innovate. The trend of consolidation in the TPA industry makes it increasingly difficult to compete against larger firms.

If you’re not in a position to acquire smaller competitors, it’s essential to leverage advancements in technology, improve your marketing strategies, and think creatively to stay competitive. You don’t necessarily have to match the size of the big players; instead, focus on developing unique differentiators in your approach that will help you stand out.

Otherwise, you risk becoming like the local hardware store or companies like Rickel’s and Channel when larger competitors like Home Depot expand.

According to Fidelity, Retirement account balances have reached all-time highs. At the end of 2024, the average balance in 401(k) plans was $132,300, and in 403(b)s, it was $119,300. The average overall contribution rates are also increasing, nearing Fidelity’s guideline of saving 15% per year for retirement (including employer and employee contributions).

More than two-thirds (69%) of employees and 67% of employers endorse retirement plans as a must-have employer benefit.

Rising numbers are great, but the average balance is far too little to fund someone’s full retirement.

In life, choice is usually a good thing. However, when it comes to daily valued 401(k) plans, too many choices aren’t a good thing. It sounds counter-intuitive, but too many choices offered to plan participants is usually a mistake.

Offering participants the right to self-direct their own 401(k) account sounds like a great idea because plan sponsors are giving plan participant a choice in shaping their retirement. The problem with these choices is that plan participants get paralyzed by being offered too many choices; they tend to get overwhelmed. For example, people assume offering so many different mutual funds on a plan’s investment menu is the way to go. However, studies have shown that the more investment options offered under the plan, it tends to depress the deferral rate of plan participants. Offering 57 mutual funds on a lineup sounds like a good idea on paper, but it overwhelms plan participants to the point that they don’t want to participate and defer their income.

The same can be said by offering participants a self-directed brokerage account. Allowing plan participants the right to a brokerage window within the 401(k) plan allows them to purchase stocks and other investments apart from the typical mutual fund menu offered under a 401(k) plan. Again, a study has shown those plan participants who use a brokerage window tend to have a worse rate of return on their 401(k) account than those participants who stick to the core fund lineup.

Offering 25+ versions of Tide detergent probably has done well in selling detergent, offering too many choices within a 401(k) plan isn’t a great thing.

Candidly, an AI-driven student debt and savings optimization platform issues a report on the effectiveness of their Student Loan Retirement Match program, which was allowed SECURE 2.0.

The SECURE 2.0 provision that enabled employers to match employees’ student loan payments with retirement contributions led to a 13.5% increase in first-time retirement plan participation and a 27% increase in employees maximizing their employer’s 401(k) match offering.

The report also indicated that 401(k) participants in Candidly’s program had average annual retirement contributions of $3,300 per participant; projected additional retirement savings of $48,800 per participant by the time of retirement; and a 58% reduction in the likelihood of turnover among participating employees.

Daniel Aronowitz, president of Encore Fiduciary, was nominated by President Trump to become the next Assistant Secretary of Labor and lead the Employee Benefits Security Administration.

Aronowitz has 30 years of experience in the professional liability industry as a coverage lawyer and underwriter. He has served as president of Encore Fiduciary for more than 13 years.

A federal judge in Amarillo, Texas, rejected arguments made by 26 attorneys general in Republican-led states challenging the legitimacy of the Biden Administration’s so-called ESG rule.

The attorney generals had asked the court to reconsider its earlier decision to affirm the rule after the U.S. Supreme Court overturned the Chevron doctrine.

The Department of Labor rule would allow plan fiduciaries to select sustainable investment options in 401(k)s, relying on environmental, social, and governance factors to act as a “tiebreaker” when all other considerations involving competing investments are equal.

The decision might be moot if the DOL withdraws the rule, which has been expected since President Trump was inaugurated.

Daniel Aronowitz, president of Encore Fiduciary, was nominated by President Trump to become the next Assistant Secretary of Labor and lead the Employee Benefits Security Administration.

Aronowitz has 30 years of experience in the professional liability industry as a coverage lawyer and underwriter. He has served as president of Encore Fiduciary for more than 13 years.

Years ago, I was irritated when a person from my community was appointed to an elected position because of a vacancy. I never met the man, but I’m a little disgusted by him because of his past posts on Facebook. Borderline racist, disparaging comments to those in the community who have another viewpoint, and just other disturbing posts suggest that he isn’t someone that I want as an elected official. Luckily those posts cost him re-election.

My wife says I post too much on Facebook and she is probably right. I may post a lot, but I try to watch what I post. I avoid any comments that could be misinterpreted and considered hateful or in poor taste. I’m a little shell-shocked because I was accosted by my law firm’s managing attorney about some innocuous posts when I worked there. Your reputation in business means everything and you can’t let some silliness on social media get the better of you. Everyone loses their temper, but going online with diatribe posts means it’s likely to be preserved in one fashion or another.

I’ve seen way too many businesses and respected individuals who have suffered because they said way too much in social media posts that they couldn’t take back. I know I certainly say too much in many of my posts concerning old places I worked or organizations I belonged to, but I always see that as a teaching moment. I try to avoid political comments on my business social media, but no one could accuse me of social media posts that could land me in hot water for being insensitive or divisive. The point is to avoid any social media posts that make you look like a creep.