In its commercials, PNC likes to say it’s “brilliantly boring,” emphasizing that it strives to be “boring” with customers’ money. The company, whose plan has about $8.1 billion in assets according to its most recent Form 5500 filing, prevailed in a recent ERISA lawsuit by sticking to the basics: regular benchmarking, thorough reviews and consistent oversight. It turns out that when the stakes were high, the “boring” work won the day against an expert witness who may have been more flash than facts.
The Allegations
A suit against PNC was filed in August 2021 by John McCauley, a participant in PNC’s Incentive Savings Plan. McCauley alleged that PNC failed to meet its fiduciary duty and charged participants excess recordkeeping fees dating as far back as 2014. PNC’s recordkeeper charged a flat per-participant fee plus fees for additional services. The per-participant fees ranged from $46.55 in 2014 to $32 in 2022. The expert witness for the plaintiffs claimed that these fees were in excess of the market rate and that as the plan grew, fees should have declined exponentially. They initially alleged that the plan should have been able to negotiate fees down to a range of $14 to $21 per participant. But PNC defended itself against the claims, stating that the 401(k) committee had been monitoring recordkeeping fees through consistent benchmarking, quarterly meetings and an RFP.
The Result
Ultimately, Judge Christy Criswell Wiegand wasn’t convinced by the expert witness. Because of the lack of demonstrable evidence to support his claim, Judge Weigand stated in her decision that his argument was “based solely on his experience without using any reproducible or traceable process.” She said that his estimates weren’t sufficient evidence to find fault because the process to make these estimates wasn’t reliable, and that much of his testimony relied on opinion rather than hard facts. As it turns out, PNC’s “boring” facts were much more compelling for this judge — she ruled in favor of the defendant as she faulted his testimony for lacking a “reliable methodology.”
Benchmarking Provides Reliable Data
Regular benchmarking with PlanFees gives you fast, accurate and reliable data so that you can ensure your clients’ fees are reasonable. The ease and convenience of PlanFees lets you make benchmarking routine in your advisory practice. Prism Total Fees Benchmarking enables you to quickly compare and benchmark 15 essential advisory services. For more detailed plan information, RFP Express gives you real quotes from top providers within 24 hours.
You already know that high fees are anything but boring — especially for your clients. Benchmark better with PlanFees.
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