Could the proposed DOL regulations lead to more retirement plan litigation?
Broadcast Retirement Network's Jeffrey Snyder discusses the impact of proposed DOL regulations to future retirement plan litigation as well as improving investment alternatives in 401k plans with Christopher Tobe, CFA, CAIA.
Jeffrey Snyder, Broadcast Retirement Network
Well, joining me now is Chris Tobe. He's an investment consultant, but he's also a principal investigator when it comes to retirement plan fees and expenses. Chris, great to see you.
Thanks for coming back on the program this morning.
Christopher Tobe, CFA, CAIA, Principal Litigation Consultant
Yeah, thanks a lot, Jeff. I really enjoy it. I enjoy your newsletter and enjoy engaging and kind of bringing another side to this issue.
Again, I've been going after excessive fees has been a big thing that I've done with public pensions and now in the 401k world. And that's where I've specialized in helping in litigation on the plaintiff's side in finding excessive fees.
Jeffrey Snyder, Broadcast Retirement Network
And to that point, part of me reaching out to you is one we appreciate having on the show, of course, but we wanna get different reactions to the new proposed regulation. So let me start there. What were your initial thoughts when you read through the 140 page proposed regs?
I mean, what stood out to you?
Christopher Tobe, CFA, CAIA, Principal Litigation Consultant
What stood out is that, you know, the checklist part of it, which is the theme. And it basically, it doesn't change ERISA. You still have to do the right things and you have to look at these contracts.
And I still think most of these alternative investments that people want to put in there still don't pass the checklist list. So just because you have a checklist doesn't necessarily mean anything. If I look at this from a, so I really think it will have very little effect on litigation, positive or negative.
It's just basically a gift to Wall Street so they can put more of these products. What I'd like to explain is that there are 800,000 401k plans out there.
Jeffrey Snyder, Broadcast Retirement Network
Okay.
Christopher Tobe, CFA, CAIA, Principal Litigation Consultant
And of those only 1%, maybe 8,000, I think are in what I call the litigation universe. Those are the ones that will even ever be able to get to litigate. So for those 8,000, that's a different world, but the other 790,000 401k plans, they're too small to litigate.
I think a lot of these products, they will start seeing some of these products hidden in their target date funds. And that's what this really does. It will increase the ability for these higher fee products to go into the lower end of the market.
And that's what the intent of this is. And I think that's what it will do. On the litigation front, I still do not think that your largest plans.
Now, most of the litigation isn't even in the top 8,000, which is over 100 million. Most of it's in the top 800. And they keep litigating smaller and smaller things on those 800.
These things like the forfeitures, which I don't think are that big a deal. I think that litigation should move from the top 800 to the top 8,000, but it's still not gonna get to that 800,000 universe for decades because of the way ERISA structure litigation, you can't sue the target date fund company. You have to sue the individual plan.
So the way the structure of ERISA goes. So I think people have to say, man, there are different 401k markets out there that will be affected differently by everything, the legislation, the litigation, and everything else. And that we have to start looking at the 401k, you have to start breaking up the 401k market a little bit because the different size matters.
Jeffrey Snyder, Broadcast Retirement Network
Well, it does matter in terms of pricing and fees. And you and I have talked about that. Let me ask you about, I think it was very clear, at least talking to some other of our peers in the industry, that one of the goals was to reduce litigation.
Did you get any feedback from the attorneys that maybe, because you are an expert witness. I mean, you do this day in and day out. You help identify plans, but you testify in front of a jury, presumably.
Did you get any feedback from any of the attorneys that you work with on this? Do they support or echo what you're saying about, hey, this is not gonna reduce litigation at all. In fact, it's actually potentially gonna increase it.
Christopher Tobe, CFA, CAIA, Principal Litigation Consultant
I don't think it's gonna increase. I think people are just neutral on it. That doesn't really have anything to do with litigation.
It has to do with helping out Wall Street with the smaller plans that aren't gonna be litigated anyhow. So I think that that's really what, and the few I've talked to, they don't really have any feel for it because first of all, there aren't, the only really alternatives I consider in 401ks now are annuities. And of the 9,000 largest or 8,000 largest plans, I've identified about 3,000 that have mostly fixed annuities, not lifetime annuities.
These are fixed annuities, the things that pay two, three, 4% and TIA's paying five. And so most of my litigation is around one insurance company is paying two or 3% and they could have got the same fixed annuity for TIA at four or 5%. And that's been the bulk of the litigation.
And that litigation isn't going away. That's gonna be a big part of, it's not usually the largest of the mega plans. It's in the medium-sized plans.
The regional hospitals are very, very typical of the type of lawsuits that I'm involved in now. Not the mega corporate plans who pretty much have been already litigated enough and they've kind of cleaned up their act with indexing.
Jeffrey Snyder, Broadcast Retirement Network
Chris, sorry, I didn't mean to interrupt you. Do you think that a, I guess you can't, even with a checklist, it's really forward looking, right? So you can't go back and re-checklist.
I guess you can go back and use the checklist to go back to old decisions, but you really can't go back and apply the checklist retroactively. So there's still a level of exposure, I think is one of your points.
Christopher Tobe, CFA, CAIA, Principal Litigation Consultant
Well, yeah, it is. But again, it's the way it's gonna be used. I think the checklist is kind of a joke because where all these alternatives are gonna go, they're buried inside of target date funds.
And remember, this is the reason why they've been moving away from SEC registered mutual fund target date funds to poorly regulated state collective investment trust because they'll allow all these alternatives in so you can hide and bury them in these inside of collective and trust inside of target date fund. So unless a plan sponsors to get away need to dig into the individual allocations within their target date fund to really do their fiduciary duty. And I don't think mostly smaller ones are even gonna do that or even know to do that.
And that's really what this comes about. The checklist is this more, to me is just kind of a window dressing on there that if someone actually did the checklist, they wouldn't buy any of this stuff in the first place, in my opinion. But it's just kind of something there.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, again, sorry to interrupt you, Chris. Are there some, you are a CFA charter holder, you're a CAIA, so you've done investment consulting, you sit on numerous, or at least you did sit on numerous state pension boards. Are there things that, if you're an investment advisor or a retirement plan advisor, as they're called today, are there things you should take away?
Because you serve the interest of the fiduciary, you're either a 321 or a 338 fiduciary. So are there things that maybe they should take away from these proposed regs? I know what the industry is gonna say and how it justified X, Y, and Z, but from your practical experience, are there things that these individuals should take away and say, okay, this makes some sense, let me alter my behavior as an advisor?
Christopher Tobe, CFA, CAIA, Principal Litigation Consultant
Well, no, but it's all about the fees. You as an advisor need to know in detail the fees of every product that's going in. And if you don't know, if you know it, then you know it, but not knowing is, and having fees are hidden.
Like, I made annuities for an insurance company for seven years. There's 200 basis points to 400 basis points embedded in fees in these products that most advisors don't know or don't wanna know. And so I think that's the whole key is that you have to look under the hood, especially your target date funds, to know each individual asset class within the target date fund and the fees.
Because 50% of 401k assets are now in target date funds. And using target date funds to block transparency and accountability is not gonna work.
Jeffrey Snyder, Broadcast Retirement Network
Chris, I've got about a minute left. I wanna get your thoughts about, is there more of an onus now around employee education? So, or what we call participant communication within the industry.
Is there more of importance around that? So should advisors, fiduciaries, record keepers, everybody in and around the ecosystem really be focused on that, what you're describing, which is greater transparency, but also more education?
Christopher Tobe, CFA, CAIA, Principal Litigation Consultant
I don't know. I've become very cynical in education. You know, I've taught things that I think a lot of the, a lot of the education I've seen has basically been anti-fiduciary to try to put people into higher fee funds.
So I have a very, very negative view of education overall. But again, you know, I'm a cynic on this fee stuff. So that's kind of the direction I'm coming from.
But I don't see that, you know, when you're covering up fees, education doesn't do much good for anybody.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, well, we're all, look, you know, the older we get and the more experience we get, and then, you know, it's like everyone likes a hotdog, but they don't like to see how the hotdog is made, right? Or the sausage, I guess is the right analogy. Chris, we're gonna have to leave it there.
It's always great to see you, my friend. Thanks so much for sharing your perspective. And look, we look forward to having you back again very soon, sir.
Great, Jeff.
Christopher Tobe, CFA, CAIA, Principal Litigation Consultant
Thank you.
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This story was originally published April 17, 2026 at 5:30 AM.