Putting your proprietary funds in a 401(k) plan makes you a target and if you don\u2019t offer them, it gives you the impression you don\u2019t like your products.<\/p>\n\n\n\n
McKinsey & Co. is shelling out $39.5 million to 33,000 people who were participants in the company\u2019s profit-sharing and money-purchase plans.<\/p>\n\n\n\n
Participants in the plans sued them in early 2019, alleging that McKinsey violated ERISA by including in-house managed funds from McKinsey Investment Office on the plan menu. The McKinsey office received investment management fees of between $20 million to $36 million per year from those funds, which the Plaintiffs allege were more expensive and had weak performance relative to other available investment options. McKinsey also agreed to retain a third party to review the plan\u2019s investment options and expense reimbursements.<\/p>\n\n\n\n
I don\u2019 know anyone at McKinsey, I think offering these funds were a recipe for disaster especially because they were pocketing fees on the plan. Putting your own proprietary funds in your own plan should only be about appearances, not pocketing the money.<\/p>\n\n\n\n
The two plans in question had more than $6 billion in assets, which helps explain the $39.5 million settlement.<\/p>\n
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