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Charles Schwab 401(k) Lawsuit Trimmed but Moves Forward

"Former Schwab employee Michael Dorman can move forward with a challenge to how the company replaced an affiliated stable value fund in its 401(k) plan with other funds. But Dorman's other allegations, which challenged the fees and performance of the plan's Schwab-affiliated funds and certain loan transactions, were dismissed[.]" [Dorman v. The Charles Schwab Corp., No. 17-285 (N.D. Cal. Feb. 8, 2019)]

Charles Schwab Seeks to Arbitrate 401(k) Investment Case

"Charles Schwab Corp. urged a federal court to order a former employee challenging the investment options in the company's 401(k) plan to submit his claims to individual, non-class arbitration ... The plan documents required participants to submit any claims arising out of or related to the plan to binding arbitration in a non-class basis, Charles Schwab alleged ... Schwab ... may be one of the first financial companies facing an ERISA lawsuit over its use of in-house funds in which the claims move to arbitration."

Ninth Circuit Signals Potential Rehearing of Denial of Class Action in Charles Schwab ERISA Suit

"At its core, the issue deals with whether an ERISA fiduciary claim is always a claim on behalf of everyone in a plan or whether a court can limit the claim to include losses to only one, or a select group, of participants. The issue also affects whether class-action waiver agreements are enforceable and, whether class actions are inherently included in every ERISA fiduciary-breach claim." [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]

Ninth Circuit Sends Charles Schwab ERISA Case to Individual Arbitration

"A U.S. Court of Appeals determined that arbitration on an individual basis is the proper forum for a participant’s claim that Charles Schwab breached its fiduciary duties and engaged in prohibited transaction under [ERISA] by holding proprietary funds in its 401(k) plan." [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]

Charles Schwab Wins Pro-Arbitration ERISA Decision

"[T]he 9th Circuit has overturned and remanded the District Court’s decision on the grounds that it is no longer 'good law' to conclude that ERISA plaintiffs as a general matter cannot be forced into arbitration....  According to the District Court, the lead plaintiff’s claims were brought on behalf of the plan -- not on his own behalf -- and without the plan’s consent he [could not] waive rights that belong to the plan, such as the right to file this action in court." [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]

Charles Schwab 2018 401(k) Participant Study (PDF)

17 presentation slides. "Two in three participants would sacrifice past spending to save more for retirement ... Unexpected expenses and quality of life spending are the top obstacles to saving for retirement ... Saving enough for a comfortable retirement is the top source of financial stress for participants ... Participants believe their quality of life in retirement will be better than that of both the previous and the next generation[.]"

District Court Denies Forced Arbitration in Charles Schwab ERISA Class Action

"The plan document's arbitration provision broadly encompasses 'any claim, dispute, or breach arising out of or in any way related to the Plan,' and extends to the ERISA claims asserted, [Schwab] said [and] further contended the arbitration provision of the plaintiff's severance of employment agreement likewise embraces the ERISA claims, insofar as it requires arbitration of 'any dispute or breach arising out of or in any way related to employment.' " [Dorman v. The Charles Schwab Corp., No. 17-285 (N.D. Cal. Jan. 18, 2018)]

Results of the Charles Schwab 2016 401(k) Participant Survey (PDF)

17 pages. "Fewer than half of participants know how much they should have saved for a comfortable retirement ... 401(k) plans are a 'must-have' benefit for job-seekers Without it, nine in ten would think twice about taking a job ... Fewer than half are confident making 401(k) decisions on their own ... One-third have decreased or made no changes to 401(k) contributions in past two years."

Charles Schwab CEO on the Future of the 401(k)

"In an interview on December 8, he weighed in on all things concerning the American investor in this landscape -- including 401(k)s, Social Security, and just who should and shouldn't invest in stocks. He discussed what it's like sitting across the hall from Schwab himself, and what he has in common with the '99%.'"

Schwab Shoos $25 Billion of Client Assets Out the Door as It Calls the Bluff of Employers with Lopsided 401(k) Contracts

"In a move that reflects the changing economics of the advice and retirement business, The Charles Schwab Corp. fired several big 401(k) clients with a combined $25 billion of assets.... Because the employers bar Schwab from, in effect, soliciting its clients thus thwarting its efforts to win rollover dollars in sufficient numbers, Schwab saw no room for these clients in its business plan going forward, according to Steve Anderson, executive vice president of retirement plan services at Schwab. Schwab wants the freedom to e-mail and hold meetings with participants of 401(k) clients."

TD Ameritrade's Retirement Plan Unit Being Merged Into Schwab

"Charles Schwab is dropping the TD Ameritrade Retirement Plan business that serves RIAs and integrating it into the Schwab Retirement Network for Advisors. The development comes nearly six months after Schwab completed its $22 billion purchase of the former rival."

Schwab 401(k) Participant Survey 2024

"A majority of workers (64%) say their employers have taken action to help them manage financial stress, a 12% increase over last year. More workers report feeling very good about their financial health (24%) compared to last year (20%), but about half of workers say their financial health has not changed and one in five say it has worsened. Gen Z (37%) and Millennials (35%) are more likely than Gen X (28%) and Boomers (21%) to say their financial health has improved."

Schwab 401(k) Participant Survey 2021 (PDF)

"[M]ore than half (53%) say they are very likely to achieve their retirement goals, compared to 37% in 2020.... On average, plan participants in 2021 believe they need to save $1.9 million for retirement, the same amount as in 2020. Ninety-one percent say their financial health is very good or pretty good.... 401(k) plans and health insurance again top the list of desired workplace benefits with more than 80% of participants saying these are 'must-haves.' "

Schwab Self-Directed Brokerage Account Indicators, Quarter Ending September 30, 2019 (PDF)

10 pages. "The average account balance for all participants in the Schwab Personal Choice Retirement Account® (PCRA) was up less than 1% to $276,929 from $275,362 a year ago and almost identical $276,547 from last quarter. Trading volumes were even with last quarter at an average of 6.7 trades per account.... SDBA participants aged 55 and over were 38.6% out of all participants, while the Gen X (age 39-54) participants were slightly higher at 41.8% and Millennials (age 27-38) at 12.9%."

Ninth Circuit Will Not Rehear Schwab ERISA Arbitration Case

"The Ninth Circuit's decision supporting the application of the arbitration clause before filing suit stands -- at least in the Ninth Circuit.... Arbitration clauses have also been raised as a preemption to litigation in at least two of the university 403(b) fee suits[.]" [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion; rehearing denied Nov. 7, 2019)]

Petition for Rehearing and Supporting Amicus Briefs Filed in Schwab ERISA Arbitration Case

"The relevant questions if a rehearing is granted might be whether the plan itself, through a provision in the plan document, can agree to arbitration -- and if it can, whether an arbitration provision in the plan document can serve to waive the rights to the remedies prescribed under ERISA Sections 409 and 502(a).... [W]hether LaRue, an individual account case, controls or is even relevant in a case involving plan-wide allegations, could be fertile ground to accept a rehearing also to the issue of whether a plan document is subject to the FAA and can waive ERISA statutory remedies." [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]

Self-Directed Brokerage Account Indicators: Schwab's Key Observations for First Quarter 2018 (PDF)

10 pages. "The average account balance for all participants in the Schwab Personal Choice Retirement Account (PCRA) was up 23.4% to $261,900 from $212,178 a year ago and slightly down by .3% from last quarter. Trading volumes were up 21% from last quarter to 7.8 average trades per quarter from 6.4.... Mutual Funds held the majority of participant assets and were slightly up at 38.2%.... Large Cap Stock Funds had the largest allocation at 28.0%, down 2% from last year.... Millenials had the lowest PCRA balance at $59,548, followed by Gen X at $188,176 and Baby Boomers at $359,568, very similar to last quarter."

Schwab CEO: Slash 401(k) Fees to Aid Workers

"Charles Schwab Chief Executive Officer Walter Bettinger on Monday called for a transformation of the 401(k) industry by slashing fees and providing participants with objective and customized advice autonomous from the plan's consultants.... He calculated that reducing the typical three-quarters of 1 percent to 2 percent fees to one-half of 1 percent by going from actively managed to strictly index funds would mean on average an additional $100,000 to each retiree. Bettinger said the two-pronged plan would mean more jobs for investment advisors because of the greater demand for more time consuming, individualized financial plans."

Schwab to Join the 401(k) Wars, Guns Blazing

Charles Schwab... could dramatically change the way that workers invest for retirement. Schwab announced that it plans to offer employers a 401(k) package that includes only index funds as investment options.... In one fell swoop, an index-only 401(k) will address several problems that led policymakers a few years back to consider massive changes to the entire structure of retirement savings.

Fido Attacks! Fidelity vs. Schwab

Excerpt: Long a distant second to Charles Schwab in the lucrative business of serving financial advisors, Fidelity is making an aggressive push to close that gap. And some advisors are taking notice.