Yale Professor "Threatens" to Reveal Thousands of High-cost 401(k) Plans
By Hal M. Bundrick
NEW YORK (MainStreet)--A Yale Law School professor is sending shockwaves through the 401(k) industry. Professor Ian Ayres has reportedly sent thousands of letters to 401(k) plan sponsors saying that he has identified them as sponsoring a "potential high-cost plan" -- and intends to publicize his findings next year. The letter further "reminds" the plan sponsors that "fiduciary duties are the most stringent imposed by the law, and require administrators to act solely in the interest of the plan participants."
Brian Graff, CEO/Executive Director of the National Association of Plan Advisors, an organization affiliated with the American Society of Pension Professionals & Actuaries (ASPPA), issued a reaction to the mass mailing in a statement on the NAPA website.
"The tone of these letters, frankly, is shocking," Graff writes. "Here we have employers offering retirement benefits to their workers (which is entirely voluntary, by the way) and this Yale Law School professor is essentially threatening them. And the threat is based on some study that is based on inherently flawed data."Professor Ayres' letter says that the fee assessments are based on Form 5500 data compiled by BrightScope. Graff says that data is old, having been compiled in 2009, and incomplete "since it ignores fees paid directly by the plan sponsors, thus not allowing for a complete assessment of the reasonableness of aggregate fees."
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