Yes, we do expect plaintiffs’ lawyers to use the new broker compensation disclosures in future lawsuits.
Do you anticipate lawsuits arising as a result of the CAA disclosure requirements (like what resulted from the 404(a) disclosure)? What advice have you given clients who have received the disclosures? Is their only obligation to review the document?
Yes, we do expect plaintiffs’ lawyers to use the new broker compensation disclosures in future lawsuits, but likely not as many as in the 401(k) space because the dollars are not the same.
We generally advise larger employers to consider an employee benefits committee to review compensation disclosures and other fiduciary matters involving their health and welfare plans. Most employers are familiar with this concept on the retirement plan side, but with the new fee disclosures and new transparency laws, we are seeing more and more employers adopt a similar fiduciary structure for their health and welfare plans. It is not enough to simply review the disclosures. The employer must ensure they are paying no more than reasonable compensation for the services they are receiving (just like in the 401(k) world).