10 Ways to Make Your Plan a Litigation

10 Ways to Make Your Plan a Litigation Target 401(k) Plan Fiduciary Governance November 7, 2019 1100 Kenilworth Avenue – Suite 110; Charlotte, North Carolina 28204 704 -333 -0508 bejs. com

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Company Leaders are Busy Employee Retirement Income Security Act (ERISA) Highest Standard of Law Personal Liability Statute Mandates Fiduciaries… § Protect retirement benefits § Ensure reasonable fees with benchmarking and RFPs § Manage legal / financial risks § Avoid conflicts of interest § Document processes and decisions 3

4 Goals We Typically See for Companies Like Yours Goal 1: Reduce Work 4 Goal 2: Reduce Risk Goal 3: Goal 4: Greater Expertise Save Money

10 Ways to Make Your Plan a Litigation Target Not Having a PROCESS Example: Investment Policy Statement (IPS) Failing to DOCUMENT the Process Example: Minutes, Vault Not Understanding and Reviewing Your OPTIONS Example: Investment Share Classes Choosing Not to ENGAGE OUTSIDE EXPERTS Example: Fiduciary Consultant Fixing Issues Without CONSULTING OUTSIDE COUNSEL Example: Untimely Contributions 5

10 Ways to Make Your Plan a Litigation Target Never ANALYZING Your Target Date Funds / QDIA Example: Glidepath, Proprietary Revenue Failing to MONITOR & BENCHMARK Fees Example: Recordkeeper, TPA, Advisor, Investments Being Too Busy to MEET REGULARLY Example: Committee Meetings Selecting and Not REVIEWING Service Providers Example: Service Agreements Believing a REGULAR RFP PROCESS is Unnecessary Example: Market Pricing 6

In Practice RECENT COURT CASES &BEST PRACTICES THE BUSINESS of PRESERVATION

Think Your Plan is Too Small to be Sued? 8

Common Theme? 9

NYU Lawsuit § NYU, MIT, and Yale sued by Plaintiff attorney, Jerry Schlichter § Plaintiff law firm has a history of winning • $334 Million in settlements ($90 Million for the firm) • WSJ article – Lawyer on a Quest to Lower Fees § Plaintiff attorney sued 11 large universities – most settled • NYU was first court case § Complaint on: Excessive Fees, Investment Offering, and Investment Monitoring • Plaintiff alleged plan loss of $358 Million § NYU has two plans with $4. 2 Billion § NYU had a 9 -person committee – broad representation (finance, HR) • Hired investment advisor as a 3(21) fiduciary in 2009 10

No Plan is Immune 11

Litigation Update – American Century Background Plan Size: $745 Million Active Participants: 1, 300 Broad Investment Committee Complaint was filed by a FORMER EMPLOYEE Litigation Surrounding Investment Selection 12 Investment Monitoring Fees

In Practice EXAMPLES OF KEY DELIVERABLES YOU SHOULD HAVE THE BUSINESS of PRESERVATION

Investment Process E L MP SA E L P M A S 14 § Asset Class Selection § Glide Path § Implementation § Return & Risk § Holdings Analysis § Operations

Expense Reasonableness 15

Documentation of Processes Meeting Minutes Fiduciary Vault 16

The Business of Preservation 1100 Kenilworth Avenue, Suite 110; Charlotte, North Carolina 28204 | 704 -333 -0508 | bejs. com