401(k) Specialist Issue 1 - 2016 - 16

LIKEABLE LAWYER?
Ranks up there with " government organization "
and " terribly pleased " in the list of
clichéd oxymorons. But Jerome Schlichter
wasn't what we expected.
If the name sounds familiar, it's because
the St. Louis-based managing partner of law
firm Schlichter, Bogard & Denton is on a
tear (putting it mildly). Ameriprise Financial,
Lockheed Martin, Fidelity Investments,
Tibble v. Edison(!)-yeah, that guy. They're
just a fraction of the firms to feel his legal
wrath over their failure to properly execute
their fiduciary duties to employees, specifically
in company 401(k) plans.
Heck, he took $57 million off Boeing in
a settlement the day before our interview,
accusing the aviation mega-giant of offering
" imprudent investment options " in its 401(k)
and " passing on excessive fees " to employees.
He even named Vanguard in his most recent
high-fee fiduciary suit, although he emphasizes
the fund company is only referenced,
not a target. Crazy? Sure, like a fox.
The investment world is still reeling (and
will be for some time) over repercussions
from the aforementioned Tibble vs. Edison
International, the high-profile case of excessive
fees that made it all the way to the Supreme
Court. Schlichter, Bogard & Denton
argued on behalf of the plaintiffs. Many industry
watchers see it as a watershed moment
in the fight for low fees, as the " ongoing duty
to monitor " for suitable investment options
mentioned by the court has 401(k) sponsors
and advisors rightly concerned about what it
means and how it will be applied.
So, after causing all this excitement,
what we expected was the celebrity-lawyer
stereotype- bold, loud, brash. What we got
was the soft-spoken Schlichter, who was
measured, deliberate and far more self-effacing
than we would have imagined. Which
makes him all the more dangerous.
We understand and are therefore wary of
being " handled, " something we've experienced
dozens of times. It doesn't matter
if it's political hacks and their false flattery
or superstar portfolio managers and their
false modesty. However, after speaking with
Schlichter, one really does get the sense it's
about helping American workers by holding
16 ISSUE 1 2016 | 401kSpecialistmag.com
employers accountable for fiduciary best
practices (that and the hundreds of millions
of dollars he's won on behalf of his clients).
Either way, if your plan isn't buttoned up,
he's coming for you, as well as anyone else
listed on the 5500.
One odd point is the support he's received
from inside the industry. Far from
circling the wagons and hunkering down,
a healthy portion of advisors and other
interested stakeholders are cheering him
on, which only adds to the surreal nature of
what's happening.
We wondered whether the rise of the
fiduciary issue and education in the public
consciousness coincided with the legal
action he's brought.
" No, " he bluntly stated.
Not at all?
" Over 10 years ago, we started getting
more and more questions from people who
were concerned about whether or not
they would have enough money to retire, "
Schlichter said. " They also expressed concern
about trying to figure out what's going
on in their plan and figuring out fees. So
we started looking into it because we were
getting questions from our clients. "
The result was a nine month dig into
industry practices before ever filing any case.
Not surprisingly, there weren't a whole lot
of people willing to talk because, according
to Schlichter, they were benefiting from the
practices. However, what was surprising was
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