Compliance

Financial Engines and Xerox Questioned in ERISA Suit

The latest ERISA lawsuit to be filed targets Xerox and Financial Engines for advice arrangements negotiated between the firms and several Ford Motor Company retirement plans. 

By John Manganaro editors@assetinternational.com | November 11, 2016
Page 1 of 3

Participants seeking to certify a class action lawsuit on behalf of three Ford Motor Company retirement plans say Xerox HR Solutions permitted excessive fees to be assessed on participant accounts, in violation of the ERISA fiduciary duty.

The text of the complaint shows the three Ford Motor Company’s retirement plans are fairly standard in their construction—with an employer contribution-only component tied to a traditional plan for salaried employees and another specifically designed for hourly employees—utilizing a master trust to permit the commingling of assets for investment and administrative purposes.

The master trust, in turn, provides for several individual investment options, and the Ford plans give individual participants the ability to choose among various investment options. As of December 31, 2015, the net assets in the trust totaled $13.94 billion, with the vast majority of the money allocated to the plans permitting employee contributions.

The defendant Xerox provides platform and recordkeeping services to the master trust for the administration of the Ford plans, plaintiffs explain. Financial Engines Inc. (FE), not actually named as a defendant but factoring significantly into the complaint, is described as providing optional advisory services that participants can access if they chose—an arrangement that is not viewed as inherently problematic by plaintiffs.

“FE and Xerox HR were not content, however, with merely providing participants with access to FE’s services,” the compliant states. “Xerox HR wanted a piece of FE’s action, and saw an opportunity to take a percentage of the account of every participant choosing to use FE’s services, in addition to the fees Xerox HR was collecting for recordkeeping.”

NEXT: Details from the text of the complaint