According to Hauser Insurance Group good fiduciary oversight is very important when it comes to managing an investment program for other businesses. Oversight of investment programs is extremely important for 401K plan sponsors who are responsible for making investment decisions for company employees. The firm has said that 401K plan sponsors are often involved in managing retirement plans so they need to have very firm oversight in order to ensure that people get steady returns and avoid significant losses in their investment portfolios.

During the past few years, there have been numerous class action lawsuits. These lawsuits are related to the Employee Retirement Income Security Act of 1974. With this federal law, there were standards set for retirement and health insurance plans. This law was put together in order to provide protection for employees of companies. In 2020, there were almost 100 lawsuits that claimed that there was a breach of fiduciary duty in regards to 401K plans. According to reports on these recent lawsuits, many 401K managers charged excessive fees which put investors at a disadvantage. According to Hauser Insurance, the 401K plan members were losing a considerable amount of money.

Many lawsuits are very expensive and can take several years to be resolved. In order for companies to avoid an outcome that is unfavorable for them, corporations often choose to come to a settlement out of court. While this can save time, it has been very costly for corporations. There were 15 corporations that paid in excess of $100 million to the plaintiff in these lawsuits.

While a vast majority of investment plan sponsors manage investment portfolios honestly and with the intention to help their clients, they still aren’t immune to lawsuits. As a result, investment plan managers should look for alternative strategies to better manage the risks involved in overseeing large sums of money for clients. According to Hauser Insurance, it is a good idea for investment plan managers and sponsors to get many layers of protection so that they avoid being involved in a costly lawsuit.

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