A participant in a Dover Corp. 401(k) plan has sued the company and plan fiduciaries, alleging their offering high record-keeping and managed account fees violated their fiduciary duties under ERISA.
The participant accused fiduciaries of "failing to timely remove their high-cost record keepers," said the Aug. 11 complaint in the case of Gosse vs. Dover Corp. et al., filed in a U.S. District Court in Chicago.
"Defendants unreasonably failed to leverage the size of the plan to pay reasonable fees for plan record keeping and managed account services," said the complaint, which is seeking class-action status. "The plan had substantial bargaining power regarding plan fees and expenses."
The lawsuit criticized Wells Fargo, the record keeper from 2009 through September 2020; Bank of America Merrill Lynch, the record keeper since September 2020; and Financial Engines, the managed account provider from 2017 to 2020. None of these firms is a defendant.
The lawsuit alleged that fiduciaries "failed to regularly monitor" the two record keepers, arguing that they should have removed Wells Fargo many years ago due to its "objectively unreasonable" fees. Bank of America Merrill Lynch, the lawsuit added, "should have never been selected to replace Wells Fargo and should have been replaced itself once it became clear it was also charging objectively unreasonable fees."
The complaint compared Dover's average per person record-keeping fee between 2016 and 2020 vs. the average fee over the same period for 14 other DC sponsors, some of which had greater plan assets and some of which had fewer plan assets. Based on Form 5500 data, the Dover plan fee was the highest — often double and sometimes triple — the other sponsors' results, the lawsuit said.
The lawsuit also criticized Financial Engines (now Edelman Financial Engines) for providing "no material value to the plaintiff or to other plan participants to warrant any additional fees." It claimed the managed account's asset allocation strategy was "not materially different" from age-appropriate target-date fund options available in the marketplace.
Adrian Sakowicz, a Dover spokesman, wrote in an email that the company declined to comment.
The Dover Corp. Retirement Savings Plan, Downers Grove, Ill., had assets of $1.8 billion as of Dec. 31, according to the latest 11-K statement.