A massive new study by Abernathy-Daley covering nearly 58,000 corporate 401(k) plans delivered a simple\u2014but startling\u2014message: virtually every plan suffers from overpriced, underperforming funds. In fact, 99% of plans have at least one fund with a cheaper, better-performing alternative over three, five, and ten-year spans, and 85% of plans have at least five such alternatives. Put simply: plan sponsors and advisors are systematically letting participants pay too much for too little.<\/p>\n
Why Fiduciaries Are Facing Legal and Ethical Heat<\/p>\n
This isn\u2019t just bad investment advice\u2014it\u2019s a liability. Abernathy-Daley pulls no punches: the industry suffers from misaligned interests, inertia, and opaque revenue sharing that keeps inferior funds on shelves. These problems are well established\u2014the freakshow litigations at Southwest Airlines and UnitedHealth earlier this year underscore the legal risk of inaction.<\/p>\n
What Fiduciaries Should Do Right Now<\/p>\n
1. Benchmark Your Plan Annually<\/strong><\/p>\n If you\u2019re not comparing your lineup against peer medians every year\u2014including returns and fees\u2014you\u2019re asleep at the wheel. Plans with persistent underperformers need to be pruned, fast.<\/p>\n 2. Fix the Lineup<\/strong><\/p>\n Plan advisors must be held accountable. If there are cheaper alternatives in the same fund category performing better, swap them out. Don\u2019t let conflicts of interest justify inertia.<\/p>\n 3. Boost Participant Education<\/strong><\/p>\n The Bottom Line<\/strong><\/p>\n Relying on participants to audit their own plan is fantasy. Instead, sponsor-led education must include easily digestible summaries of fee impact and fund replacement rationale.<\/p>\n This isn\u2019t theoretical. It\u2019s empirical: you\u2019re almost guaranteed to find overpriced, lagging funds if you audit your 401(k) lineup. That\u2019s a fiduciary failure\u2014not an investment oversight.<\/p>\n If you\u2019re serious about your duty as a fiduciary\u2014if you\u2019re serious about participants\u2019 retirement outcomes\u2014you\u2019ve got to stop treating fund selection as a \u201cset-it-and-forget-it\u201d routine. Benchmarks, accountability, and education are not optional. They\u2019re the difference between good faith compliance and systemic breach.<\/p>\n <\/span><\/p>","protected":false},"excerpt":{"rendered":" A massive new study by Abernathy-Daley covering nearly 58,000 corporate 401(k) plans delivered a simple\u2014but startling\u2014message: virtually every plan suffers from overpriced, underperforming funds. In fact, 99% of plans have at least one fund with a cheaper, better-performing alternative over … Continue reading