Private Equity Wants In On Your 401(k). This Lawyer Is Ready to Fight

Core Viewpoint - The financial industry, supported by the Trump administration, is attempting to limit lawsuits against retirement plan fiduciaries, particularly targeting the practices of attorney Jerry Schlichter, who has successfully litigated against excessive fees in retirement plans [1][5][20] Group 1: Legal Landscape and Industry Response - Schlichter has successfully sued major companies and institutions, resulting in over $750 million in settlements since 2006, with notable cases including ABB's $55 million settlement in 2019 and Boeing's $57 million settlement in 2015 [2][3][15] - The Trump administration is preparing to implement a "safe harbor" for private assets in 401(k) plans, making it more difficult to sue plans that demonstrate proper investment scrutiny processes [5][6] - The number of lawsuits related to retirement plan fees has surged, with nearly 450 lawsuits filed from 2020 to September 2021, primarily targeting plans with over $500 million in assets [17][18] Group 2: Investment Strategies and Risks - The introduction of private equity and alternative funds into 401(k) plans is seen as a significant shift, with proponents arguing that these investments could potentially increase returns by an average of 0.50% per year over a 40-year period [4][8] - However, these private assets typically come with higher fees and less liquidity compared to traditional stock and bond index funds, raising concerns about their suitability for retirement investors [9][11] - Schlichter warns that the inclusion of private equity in retirement plans could expose fiduciaries to greater risks and complicate their responsibilities, as these investments are often opaque and expensive [11][10] Group 3: Industry Perspectives and Future Outlook - Financial firms argue that private credit strategies can provide significant value to investors, countering the trend of focusing solely on costs [7] - The current regulatory environment is causing companies to be more cautious in their retirement plan offerings, as the fear of litigation may stifle innovation [18] - Despite the changing political landscape, Schlichter remains committed to pursuing legitimate cases, emphasizing that judicial decisions will ultimately shape the law [20]