When you contribute to your 401(k), you trust that your money is working hard for you. But what if it’s working harder for your employer? That’s the central question in the investigation into the Alliance Bernstein & Eaton Vance 401k plans. By allegedly loading these plans with their own proprietary funds, the companies collected fees directly from their employees’ retirement accounts, even when those funds performed poorly compared to other available options. This potential breach of duty can quietly erode your savings over time. This guide will help you understand the investigation, identify if your savings are at risk, and know what actions you can take.

Key Takeaways

Watch for Conflicts of Interest: Your 401(k) plan should not primarily benefit your employer. When a plan is filled with the company’s own investment funds, it can lead to high fees and poor returns that directly harm your retirement savings.
Your Employer Has a Fiduciary Duty: Federal law requires the people managing your 401(k) to act solely in your best interest. This means they must choose prudent investments and keep fees reasonable, putting your financial well-being ahead of company profits.
High Fees and Low Returns Are Red Flags: Regularly review your account statements. If your funds consistently underperform similar market options while charging high fees, it’s a clear warning sign that your plan may be mismanaged and it’s time to seek guidance.

What Is the 401(k) Investigation?

An investigation is currently underway into the employee 401(k) plans at Alliance Bernstein and Eaton Vance. The central issue is that these companies allegedly filled their own employees’ retirement plans with their own proprietary investment funds. This practice, known as self-dealing, allowed them to earn fees directly from the retirement savings of their workforce. When a company prioritizes its own profits over the financial well-being of its employees, it raises serious questions about its fiduciary duties.

Your 401(k) is one of your most important assets for the future, and you trust your employer to offer sound investment options. The investigation suggests that instead of providing a range of competitive, low-cost funds, these companies may have used their 401(k) plans as a captive market for their own products. This creates a significant conflict of interest, where the company benefits from fees even if the funds themselves are not the best choice for employees. This situation highlights the kind of complex investment issues that can quietly erode your savings over time.

Why Your Plan Is Under Scrutiny

The core of the problem lies in two areas: high fees and poor performance. Many of the proprietary funds offered by Alliance Bernstein and Eaton Vance in their employee 401(k)s have reportedly underperformed compared to similar, more affordable investment options available on the market. At the same time, these funds often came with higher-than-average management fees. This combination is a recipe for diminished returns. When your retirement savings are eaten away by excessive fees and fail to grow due to underperformance, it can seriously jeopardize your financial goals. This type of mismanagement can be a form of broker fraud and negligence, where your financial interests are placed second to those of the company managing your plan.

How This Could Affect Your Retirement Savings

The impact of high fees and underperforming funds on your retirement savings can be substantial. Over many years of saving and investing, even a small difference in annual returns or fees can compound into a massive shortfall. We’re not talking about a few dollars; this situation could have cost employees thousands, or even tens of thousands, of dollars from their retirement accounts. This is money you worked hard to save and were counting on for your future. When your nest egg is smaller than it should be due to mismanagement, it directly affects your ability to retire comfortably and on your own terms. It’s a quiet theft from your future that you may not notice until it’s too late.

Understanding Potential ERISA Violations

These actions may violate a federal law called the Employee Retirement Income Security Act of 1974 (ERISA). This law was specifically created to protect employees’ retirement assets. ERISA establishes strict rules for the fiduciaries who manage 401(k) plans, requiring them to act solely in the best interest of the plan participants. The law includes rules against certain “prohibited transactions,” which are designed to prevent self-dealing and conflicts of interest. Forcing employees into proprietary funds that underperform and charge high fees could be considered a breach of these important fiduciary duties. Essentially, ERISA is your legal shield against this kind of corporate behavior, ensuring your retirement plan serves you, not your employer’s bottom line.

Are Proprietary Funds and High Fees to Blame?

When you look at your 401(k) statement, you probably focus on the total balance. But the details behind that number—specifically, the funds you’re invested in and the fees you’re paying—are what truly shape your financial future. The investigation into Alliance Bernstein and Eaton Vance centers on two key areas: their use of proprietary funds and the high fees associated with them. A proprietary fund is an investment fund managed by the same company that provides your 401(k) plan. While not automatically a problem, it can create a situation where the company prioritizes its own profits over your retirement savings. Let’s break down what this means for you.

The Problem with High-Fee Investments

High fees are silent portfolio killers. Even a small percentage can eat away at your returns over time, leaving you with significantly less money for retirement. The issue with some Alliance Bernstein and Eaton Vance 401(k) plans is that many of their own proprietary funds have allegedly underperformed while charging higher-than-average fees. When your retirement plan is filled with expensive, lackluster funds, your savings struggle to grow. These seemingly small fees compound year after year, potentially costing you tens or even hundreds of thousands of dollars by the time you retire. These are the kinds of investment issues that can seriously jeopardize your long-term financial security.

How to Spot Poor Performance

Your employer has a responsibility to manage your 401(k) plan in your best interest. This is known as a “fiduciary duty.” This means they should be selecting and monitoring the plan’s investment options to ensure they are sound choices for employees. So, how can you tell if your funds aren’t measuring up? Start by looking at your plan’s performance reports. Compare your funds’ returns to a relevant benchmark, like the S&P 500 index. If your funds consistently lag behind similar, lower-cost options over several years, it’s a clear warning sign. A fiduciary is supposed to protect you from this, not steer you toward their own underperforming products.

Identifying Potential Conflicts of Interest

A major red flag is a potential conflict of interest. This can happen when a company fills its employee 401(k) plan with its own proprietary funds, even when better, cheaper alternatives exist. The investigation into Alliance Bernstein and Eaton Vance suggests they may have put their own financial interests ahead of their employees’ retirement goals. By favoring their own products, a company can collect more in management fees, directly profiting from your retirement account. This practice raises serious questions about whether they are fulfilling their fiduciary duty or engaging in a form of broker fraud and negligence by prioritizing company profits over employee well-being.

Comparing Your Plan to Industry Standards

It can be tough to know if your 401(k) fees are reasonable without a point of reference. That’s where benchmarking comes in. Benchmarking involves comparing your plan’s fees and investment performance against industry standards for plans of a similar size. While most employees don’t have the tools to do this themselves, it’s a critical step in evaluating a plan’s health. If a review shows that your plan’s costs are significantly higher than the average, it indicates that something may be wrong. Consistently high fees paired with weak performance is a powerful sign that your retirement plan may not be managed with your best interests at heart.

Red Flags of 401(k) Mismanagement

It can be tough to tell if your 401(k) plan is being mismanaged. The statements are often confusing, and it’s easy to assume that your employer has your best interests at heart. But sometimes, a company’s financial interests can get in the way of its employees’ retirement security. When that happens, your hard-earned savings could be at risk due to high fees, poor investment choices, or conflicts of interest.

Knowing what to look for is the first step toward protecting your future. You don’t need to be a financial whiz to spot the warning signs. By paying closer attention to your plan’s details and asking the right questions, you can identify potential problems before they do serious damage to your nest egg. Let’s walk through some of the most common red flags that suggest your retirement plan may not be working for you.

Unpack Your Plan’s Fee Structure

High fees are one of the most damaging, yet hidden, threats to your retirement savings. Even a small percentage difference can cost you tens or even hundreds of thousands of dollars over your career. The investigation into Alliance Bernstein and Eaton Vance 401(k) plans highlights this concern, noting that many of their proprietary funds “have underperformed and impose higher than average fees.” Proprietary funds are investment products managed by the company itself, which can create a conflict of interest. Check your plan statements for expense ratios and administrative fees. If they seem high compared to industry averages, it’s a major red flag that your plan may be prioritizing profits over your returns. These are complex investment issues that can quietly drain your account.

Recognize Underperforming Investments

Your employer has a legal obligation to act in your best interest. Both Alliance Bernstein and Eaton Vance are supposed to act as “fiduciaries” for their 401(k) plans, which means they must manage them prudently and for the exclusive benefit of employees. When a plan is filled with the company’s own funds that consistently perform worse than similar, lower-cost alternatives, it raises questions about whether they are fulfilling that duty. You can check your fund’s performance by comparing it to a relevant market index, like the S&P 500. If your investments are consistently lagging, it could be a sign of broker fraud and negligence. Your retirement plan should be working for you, not against you.

Find Issues in Your Plan Documents

The fine print matters. Your 401(k) plan documents, like the Summary Plan Description, can reveal a lot about how your plan is managed. Look for language that seems to favor the company’s own investment products or limits your ability to choose outside options. These practices could potentially violate the Employee Retirement Income Security Act of 1974 (ERISA), a federal law designed to protect your retirement assets. ERISA has strict rules against “prohibited transactions” where a company might use plan assets to benefit itself. If your plan seems to be pushing its own proprietary funds at the expense of better-performing, more affordable options, it’s a significant warning sign that something is wrong.

Know What Your Plan Is Required to Tell You

Transparency is not optional—it’s your right. Your plan administrator is required by law to provide you with clear, accessible information about your investment options, including their performance and all associated fees. Unfortunately, many employers may not have the resources to properly benchmark their plans against industry standards to ensure fees are reasonable. If you find it difficult to get straight answers about costs or if the information you receive is confusing and vague, that in itself is a red flag. You shouldn’t have to be a detective to understand how your money is being managed. If you feel you’re being kept in the dark, it may be time to contact us for guidance.

Know Your Rights as a Plan Participant

When you contribute to a 401(k), you’re not just handing your money over and hoping for the best. Federal law provides a framework of rights designed to protect your retirement savings. Understanding these rights is the first step toward making sure your financial future is secure and that the people managing your money are held accountable. If you suspect your plan is being mismanaged, knowing your rights gives you the power to take action.

How ERISA Protects Your Retirement

Your retirement plan is protected by a federal law called the Employee Retirement Income Security Act of 1974, or ERISA. Think of ERISA as the rulebook for your 401(k). It sets minimum standards for most voluntarily established retirement and health plans in private industry. Its purpose is to protect the interests of plan participants like you. This law requires fiduciaries to provide you with information about the plan, and it establishes standards of conduct for those who manage plan assets. ERISA specifically has rules against certain “prohibited transactions” to prevent mismanagement and conflicts of interest by the companies in charge of your retirement funds.

What Your Plan Fiduciary Owes You

The people or entities that manage your 401(k) plan, such as Alliance Bernstein and Eaton Vance, are considered “fiduciaries.” This is a critical role that comes with a significant legal responsibility: they must act solely in your best interest. This is known as their fiduciary duty. It means they are required to make decisions with care, skill, and diligence, ensuring that plan fees are reasonable and investments are prudent. When a fiduciary fails to meet these standards, it can be a form of broker fraud and negligence. Their loyalty must be to you, the plan participant, not to their own bottom line.

Your Legal Safeguards and Options

If you believe your plan’s fiduciaries have breached their duties, you have legal options. ERISA allows you to take action to protect your retirement savings. You can file a claim for benefits or sue for breach of fiduciary duty. Often, these disputes are resolved through a process called securities arbitration, which is a formal way to settle issues without going to court. The first step is often to discuss your situation with a securities attorney who can help you understand your specific circumstances and what you can do about them. You don’t have to figure this out alone; getting professional guidance is a key part of protecting your rights.

Important Timelines to Consider

It’s important to know that your right to take legal action is not unlimited. There are strict deadlines, known as statutes of limitations, for filing claims under ERISA. If you wait too long to address concerns, you could lose your right to pursue a claim and recover any losses. Given that many of the proprietary funds offered in the Alliance Bernstein and Eaton Vance 401(k) plans have allegedly underperformed while charging high fees, time is a factor. If you have concerns about these or other investment issues in your plan, it’s wise to review your options sooner rather than later.

How to Protect Your Retirement Savings

Discovering potential issues with your 401(k) can be unsettling, but you have the power to take action. Your retirement savings represent years of hard work, and it’s crucial to ensure they are being managed responsibly. By taking a few proactive steps, you can get a clearer picture of your plan’s health and determine if your money is truly working for you. The following steps can help you assess your situation and understand your options for safeguarding your financial future.

Review Your Plan Documents

Start by gathering all your 401(k) statements and plan documents. It might feel like a lot of paperwork, but these materials hold the key to understanding your investments. Look closely at the fees you’re paying and the performance of the funds in your portfolio. Some plans, like those from Alliance Bernstein and Eaton Vance, have been found to offer proprietary funds that underperform while charging higher-than-average fees. Compare your funds’ returns to similar, lower-cost index funds. If you see a pattern of high costs and low returns, it’s a clear sign that you need to look deeper into your investment issues.

Keep a Record of Your Concerns

As you review your documents, start a file to keep track of everything you find. Make copies of statements that show high fees or poor performance. Write down dates and details of any conversations you have with your plan administrator about your concerns. Remember, your 401(k) plan fiduciaries have a legal duty to act in your best interest. Consistent underperformance and excessive fees can be signs of broker fraud and negligence. Having a detailed record of these issues will be incredibly valuable if you decide to take further action to protect your savings. This documentation creates a clear timeline of your findings and efforts to get answers.

Consider Filing a Formal Complaint

If your research confirms that your 401(k) plan is burdened by high fees and underperforming funds, you may need to consider more formal steps. The Employee Retirement Income Security Act of 1974 (ERISA) sets strict rules for companies that manage retirement plans, including rules against self-serving deals. Pushing employees into expensive, proprietary funds that benefit the company more than the investor could be a violation of these rules. Filing a complaint is a significant step, and it often involves a process like securities arbitration to resolve the dispute. This legal framework is in place to protect employees and hold plan managers accountable.

Talk to a Securities Attorney

You don’t have to figure this all out on your own. The rules governing 401(k) plans are complex, and it can be difficult to know if your rights have been violated. Speaking with a securities attorney can provide clarity and direction. A lawyer who understands ERISA and investment mismanagement can review your findings, explain your legal options, and help you decide on the best course of action. If you are or were enrolled in a 401(k) plan with Alliance Bernstein or Eaton Vance and have concerns about your investments, please contact us for a free, confidential consultation to discuss your situation.

Take Action to Secure Your Retirement

Discovering that your 401(k) plan might be weighed down by high fees and underperforming funds can be unsettling. But knowledge is the first step toward protecting your hard-earned savings. Instead of feeling overwhelmed, you can take clear, methodical steps to assess your situation and safeguard your financial future. The following actions will help you get a better handle on your retirement plan, understand your rights, and decide on the best path forward for you and your family.

Monitor Your 401(k) Account

Your quarterly statements are more than just numbers on a page; they’re a report card for your retirement savings. Make it a habit to review them closely. Pay special attention to the funds you’re invested in, particularly if they are proprietary funds from Alliance Bernstein or Eaton Vance. These in-house funds have faced scrutiny for allegedly charging higher-than-average fees while delivering subpar returns. Compare your fund’s performance against a relevant market index, like the S&P 500. If your investments are consistently lagging while fees are chipping away at your balance, it’s a significant red flag that deserves your attention.

Explore Your Options for Professional Guidance

You don’t have to figure this out alone. If you’ve reviewed your statements and something doesn’t feel right, speaking with a legal professional can bring clarity to a complex situation. A securities attorney can review your 401(k) plan documents and help you understand if your retirement savings have been impacted by mismanagement or excessive fees. Getting a professional opinion can help you confirm your suspicions and learn about the potential avenues for recovering losses. Many firms offer initial consultations, giving you a chance to discuss your concerns and explore your options without financial commitment.

Understand Your Legal Recourse

As a plan participant, your retirement savings are protected by a federal law called the Employee Retirement Income Security Act of 1974 (ERISA). This law sets strict standards for the people and companies that manage 401(k) plans, known as fiduciaries. They have a legal duty to act in your best interest, which includes selecting prudent investments and ensuring fees are reasonable. When fiduciaries offer proprietary funds that benefit their own company at the expense of employees, it may constitute a breach of this duty. Understanding that these protections exist is the first step in holding plan managers accountable through securities arbitration.

Define Your Next Steps

Ready to move forward? Start by gathering all your relevant 401(k) documents, including recent statements, fee disclosures, and any plan communications you’ve received. Having this information organized will be incredibly helpful. Next, consider how your plan’s fees and performance stack up against industry averages. A simple online search for “average 401(k) fees” can provide a useful benchmark. If you find that your plan’s costs are high and its returns are low, it’s strong evidence that you should take action. The team at The Frankowski Firm is here to help you understand your rights, so please contact us for a confidential review of your situation.

Frequently Asked Questions

How can I tell if my 401(k) is filled with these problematic proprietary funds? Start by looking at your account statement or online portal for the names of the investment funds you’re in. If the fund names include your employer’s name, like “Alliance Bernstein Growth Fund” or “Eaton Vance Value Fund,” they are likely proprietary. The key issue isn’t just the name, but the combination of high fees and consistent underperformance compared to standard market benchmarks like the S&P 500.

My employer offers their own funds in our 401(k). Is that always a bad thing? Not necessarily, but it does create a potential conflict of interest that you should watch closely. The problem arises when a company fills the plan with its own funds even when better, lower-cost alternatives are available. Your employer has a legal duty to act in your best interest, and if they prioritize earning fees from their own products over your retirement security, they may be failing to meet that standard.

What exactly is a “fiduciary duty” and how does it apply to my 401(k)? Think of a fiduciary as someone legally required to act in your best financial interest, not their own. For your 401(k), the company managing the plan is a fiduciary. This means they must prudently select and monitor investment options and ensure that all fees are reasonable. If they load your plan with expensive, underperforming funds just because it benefits their bottom line, they could be violating this important duty.

I’ve noticed high fees and poor returns for a while. Is it too late to do anything about it? It’s crucial to act promptly, as there are legal deadlines for filing claims related to retirement plan mismanagement. However, discovering the issue is the first step. The law provides a window of time to take action after you become aware of a potential problem. The best way to understand the specific timeline for your situation is to document your concerns and discuss them with a legal professional.

What’s the first step I should take if I’m concerned about my retirement plan? Begin by gathering your most recent 401(k) statements and any plan documents you have. Review them for high expense ratios and compare your funds’ performance to similar investments over the last several years. If what you find confirms your concerns, the next step is to seek professional guidance. Speaking with a securities attorney can help you understand your rights and determine the best course of action.

Is Your Alliance Bernstein & Eaton Vance 401k at Risk?