Bechtel Managed Account QDIA Lawsuit Dismissed

The complaint accused the engineering and construction firm of defaulting participants into a high-fee option that provided no benefits compared with a target-date fund. 

A federal judge in Virginia dismissed for a second time a lawsuit filed against Bechtel Global Corp., its board of directors and its trust and thrift plan committee alleging the company defaulted plan participants into a managed account that did not justify the associated fees. 

U.S. District Judge Anthony Trenga granted the dismissal on January 10, stating that plaintiff Debra Hanigan’s second amended complaint failed to allege a “meaningful benchmark” to support her excessive fee claim. 

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In Hanigan v. Bechtel Global, Hanigan originally argued in May 2024 that without participant engagement, the managed account did not produce results worth the additional fees, particularly when target-date funds could have produced similar results at a lower cost.  

According to her complaint, as of February 2024, approximately 63% of Bechtel’s plan participants were enrolled in the managed account, called the Professional Management Program, and it was the qualified default investment alternative for the 401(k) plan. From 2018 to 2023, the managed account participants paid an average of approximately $940 per year in investment, administrative and recordkeeping fees. Approximately 65% of participants do not provide any personalized information to influence the asset allocation within the managed account. 

The managed accounts were run by Edelman Financial Engines as provided by recordkeeper Empower. 

Hanigan also argued that using the managed account as the QDIA for the plan “significantly and imprudently” increased the administrative fees paid to the recordkeeper from participants when compared with defaulting them into TDFs.  

Trenga had previously dismissed the suit in October 2024 for similar reasons, but the judge allowed an opportunity to amend the suit to address the plaintiff’s failure to provide meaningful benchmarks. 

However, Trenga’s recent decision found that Hanigan’s claim that the asset allocation models for the managed account were comparable to a TDF option was neither factual nor plausible. He stated that the managed account engages in a level of asset allocation and management that are not present in a TDF and that Hanigan failed to demonstrate that the asset allocation and investment management of a TDF and a managed account are similar. 

Trenga further ruled that the fact that some participants did not provide personalized information for the managed account does not change this analysis.  

Additionally, because Hanigan did not plausibly allege another breach of fiduciary duty, her claim alleging a failure to monitor was also dismissed. 

The plaintiff was represented by law firms Fitzerald Hanna & Sullivan PLLC and Walcheske & Luzi LLC, and Bechtel was represented by Go

Prudential, Dimensional Fund Advisors, FIDx Announce Product Partnership

The collaboration will allow for protected lifetime income strategies to be added to managed accounts via the FIDx Insurance Overlay marketplace.

Prudential Financial Inc. has collaborated with Dimensional Fund Advisors L.P. and Fiduciary Exchange LLC to introduce protected lifetime income strategies to managed accounts through the latter’s FIDx Insurance Overlay marketplace.

“Working with Dimensional and FIDx to bring protected lifetime income strategies to managed accounts is a key step in advancing Prudential’s commitment to expanding access to retirement security for more people,” Ann Nanda, head of future growth initiatives at Prudential Retirement Strategies, said in a statement.

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Nanda highlighted that this collaboration builds on Prudential’s existing offerings, such as the MyRock Advisor Variable Annuity, available to registered investment advisers through FIDx’s broker/dealer.

The new partnership also extends Prudential’s relationship with Dimensional, which includes incorporating a Dimensional index into the FlexGuard registered index-linked annuity suite and adding a Dimensional index to the SurePath suite of fixed-indexed annuities. FlexGuard and SurePath are Prudential products.

“We look forward to working with Prudential and FIDx to bring our well-diversified, low-turnover systematic strategies to more retirees and their advisers nationwide,” Savina Rizova, co-chief investment officer and global head of research at Dimensional, said in a statement.

The FIDx Insurance Overlay marketplace serves as a bridge connecting insurance carriers, wealth management platforms and advisers. By integrating insurance-based solutions into one platform, advisers can efficiently manage these options.

“Our Insurance Overlay marketplace lets advisers easily add longevity, income and protection directly to a managed account, enabling them to remain focused on helping clients achieve their retirement goals,” FIDx CEO Rich Romano said in a statement.

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