ASPPA Launches Association For Plan Advisers

The American Society of Pension Professionals & Actuaries (ASPPA) announced the launch of The National Association of Plan Advisors (NAPA).

NAPA is structured as a professional society exclusively focused on advisers serving employer-sponsored retirement plans. Advisers will benefit from advocacy, business intelligence, and networking designed to help them succeed and stay abreast of emerging industry trends and best practices, the organization said.

“First and foremost, NAPA is about advocacy. Unfortunately Washington policymakers underestimate the role plan advisers play in the retirement industry. The recent debates over uniform fiduciary standards, fee disclosure, and the definition of investment advice under ERISA are examples of current issues in play here in DC. Given our economic uncertainty and the debate over the future of 401(k) plans, there has never been a more important time for retirement plan advisors to provide a unified and strong voice on these issues,” said Brian Graff, Executive Director and CEO of ASPPA.

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Besides advocacy, NAPA members will have access to Webcasts, newsletters, government affairs briefing calls, industry expertise for their practice and clients, and registration discounts for the The ASPPA 401(k) SUMMIT, its annual conference for advisers.

For more information about NAPA, visit www.asppa.org/napa
 

Ameriprise Facing Revenue-Sharing Lawsuit

Members of Ameriprise Financial Inc.’s 401(k) plan filed a proposed class action on Wednesday claiming they lost $20 million in investments, according to published reports.

They claim the loss is because the financial services company favored its own underperforming subsidiary funds over investment plans with better performance records. The suit alleges that, since 2005, the company had invested in hundreds of millions of dollars in funds managed by its subsidiary RiverSource Investments LLC and Ameriprise Trust Co. (ATC), even though those investment advisers charged higher fees than others.



Law360 reported the members claim that Ameriprise selected those funds even though there were other reasonably-priced investment options because the RiverSource funds allegedly provided its affiliated companies with millions of dollars in fees, some of which ATC received. Ameriprise also selected ATC without any other competitive bids because ATC’s recordkeeping fees benefited Ameriprise when it sold its recordkeeping business to Wachovia in 2006.

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According to the complaint, “Defendants failed to engage in a prudent process for the selection of plan investment options. Instead, defendants chose more expensive funds with inferior performance histories in order to generate revenue for RiverSource and ATC and ultimately to benefit Ameriprise.”



The plaintiffs claim that RiverSource had received a one-star rating in 2005 from independent rating service Morningstar Inc., while other funds like the Vanguard Total Stock Market Index Fund had received four stars that year. The article stated that the members also say that more prudent investors, who had become aware that the RiverSource fund was underperforming, had pulled out a significant amount of their investments in 2005 and 2006. They withdrew over $16 billion in assets over those two years, according to the complaint. “RiverSource’s retirement funds also merely invested in other RiverSource mutual funds instead of stocks or money markets," the plaintiffs allege, adding that those funds charged extra fees “for the benefit of ATC and RiverSource."

The suit seeks a court order requiring Ameriprise to compensate for the investment plan’s losses and to disgorge money received through exorbitant fees.

The plaintiffs are represented by Jerome J. Schlichter, whose firm is known for filing seven revenue-sharing lawsuits in 2006. Michael A. Wolff and Mark G. Boyko of Schlichter Bogard & Denton, and Thomas Pahl and Lisa Bachman of Foley & Mansfield PLLP.

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