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Voya's Win in 401(k) Fee Suit Involving Financial Engines Bodes Well for Other Record Keepers

" 'The court here has said that an entity can be a fiduciary for some purposes and not others, and with respect to this fee issue, Voya was not a fiduciary,' [attorney John Utz] said. 'It was not a fiduciary because it wasn't acting as a fiduciary in negotiating fees, and ... once the arrangement was in place, there was not anything Voya could do to control its compensation.' Voya, for example, couldn't control the number of participants using the personalized advice services offered in the Nestle 401(k) plan." [Patrico v. Voya Financial, Inc., No. 16-7070 (S.D.N.Y. June 20, 2017 ]

Voya Financial Comment Letter to EBSA on Proposed ESG Rule

"[T]he Proposal is fundamentally flawed for two reasons. First, among the many qualitative factors an ERISA fiduciary may appropriately consider in making an investment decision, the Proposal singles out ESG factors and treats them with skepticism.... Second, in the context of participant-directed individual account plans, the Proposal fails to account for the positive effect on investor behavior that the availability of ESG-focused investment options can have, and fails to identify how and when changes to employee participation and / or saving rates can be validly considered by an ERISA fiduciary when selecting available plan investments."

Voya Accused of Layering 401(k)s With Unnecessary Fees

"According to the lawsuit ... Voya contracted with federally registered investment adviser Financial Engines Advisors LLC to provide advice to participants in Voya-administered retirement plans. Voya then charged participants a fee of as much as 50 basis points for this arrangement ... Voya's arrangement with Financial Engines is structured largely so that Voya can collect an unnecessary layer of fees from the retirement plans it oversees, according to the Nestle plan participant's complaint. In her view, this is an attempt by Voya to avoid federal laws limiting its ability to provide financial advice steering retirement savers toward its own products." [Patrico v. Voya Fin., Inc., No. 16-07070 (S.D.N.Y. complaint filed Sept. 9, 16]

Lawsuit Alleges Voya Charged Big Fees to Small 401(k)

"Voya Financial Inc. is accused in a new lawsuit of charging excessive record-keeping and administrative fees to a small 401(k) plan... The participant seeks class treatment for 47,000 plans and 4.5 million individual investors. Based on certain fees charged to the plan, Voya 'potentially earns over $1 billion in excessive compensation at the expense of the individual plans and their participants,' the lawsuit said." [Goetz v. Voya Financial, Inc., No. 17-1289 (D. Del., complaint filed Sept. 8, 2017)]

Voya Scores Win in ERISA Suit Over Robo-Adviser Fees

"The investor, a participant in Nestle USA Inc.'s 401(k) plan who filed a proposed class action, can't use [ERISA] to challenge Voya's fees, a federal judge ruled June 20. That's because Voya wasn't acting as an ERISA fiduciary when it negotiated the fees for Financial Engines' advisory services, the judge said." [Patrico v. Voya Financial, Inc., No. 16-7070 (S.D.N.Y. June 20, 2017 ]

Voya Escapes Lawsuit Over 401(k) Robo-Adviser Fees

"A 401(k) investor who accused Voya Financial Inc. and its subsidiaries of overcharging for investment advice from robo-adviser Financial Engines Advisors LLC won't get another chance to make her case. A federal judge on March 13 denied the investor's request to amend her complaint ... The judge reiterated her prior conclusion that the investor couldn't use [ERISA] to challenge these fees, because the defendants weren't acting as ERISA fiduciaries when negotiating fees with Financial Engines."

Some Allegations in 401(k) Case Against Voya Survive Motion to Dismiss

"[The district court judge] dismissed ERISA complaints alleging mismanagement of a Voya stable value fund, a Voya target-date series, a Voya real estate fund and two other funds offered by third-party investment managers. He also dismissed the allegation that the defendants failed to monitor administrative fees. However, he refused to dismiss allegations that the defendants engaged in certain prohibited transactions covered by ERISA." [Ravarino vs. Voya Financial Inc., No. 21-1658 (D. Conn. Jun. 13, 2023)]

Judge Scales Back Claims Against Voya in Suit Alleging Excessive Fees

"The plaintiff, a participant in the plan, first alleged that Voya breached its fiduciary duties under [ERISA] by charging excessive fees. But 'a party does not act as a fiduciary with respect to the terms in the service agreement if it does not control the named fiduciary's negotiation and approval of those terms,' [Judge Colm Connolly] wrote ... Connolly rejected the plaintiff's argument that because Voya can charge different Daily Asset Charges over the lifetime of the plan, it has discretion over the plan and is therefore a fiduciary." [Goetz v. Voya Financial, Inc., No. 17-1289 (D. Del. Feb. 4, 2020)]

Voya Faces ERISA Complaint Targeting Its Own Plan

"The complaint alleges these funds were not selected and retained for the plan as the result of an impartial or otherwise prudent process, but were instead selected and retained by the defendants because they benefited financially from including these options in the plan." [Ravarino v. Voya Financial Inc., No. 21-1658 (D. Conn. complaint filed Dec. 14, 2021)]

With Sustainable Investing Pledge, Voya Joins Industry ESG Debate

"While some voices have emerged in the last several months arguing that the use of ESG investing programs has growth too political in the U.S.... leaders at Voya say this move is coming at the behest of clients and is simply the right thing to do, financially and otherwise.... Practically speaking, it is of course still unclear whether and to what degree signing the pledge will result in a change in Voya's investing approach."

Voya Comment Letter to DOL on Proposal for State-Sponsored Retirement Programs (PDF)

"We do not ... believe the system that would be enabled by the Proposal -- a 50-state patchwork of government-administered retirement savings vehicles with inconsistent state and local regulations, low annual contribution limits, no opportunity for employer contributions and limited access to retirement planning and advice -- would successfully address the retirement savings gap.... [A] patchwork of state government-administered plans would take momentum away from subsequent implementation of solutions that would more successfully address the retirement savings gap."

Voya Again Wins Dismissal of Stable Value ERISA Lawsuit

"[T]he district court's second take concludes the lead plaintiff's underlying allegations do not provide 'more than a sheer possibility that a defendant has acted unlawfully.'... [T]he decision points out ... [that] ERISA requires a fiduciary's 'complete loyalty,' but fiduciaries 'do not violate their duties to a pension plan by taking action which, after careful and impartial investigation, they reasonably conclude is best to promote the interests of participants and beneficiaries,' even if the decision 'incidentally benefits' the fiduciary. " [Dezelan v. Voya Retirement Ins. and Annuity Co., No. 16-1251 (D. Conn. Aug. 17, 2018)]

Voluntary Benefits: The Mental Health-Financial Wellness Connection

"60% of respondents reported being highly or moderately concerned about their household financial well-being.... [E]mployers often underrate the stress that employees experience from financial instability. In doing so, they miss an opportunity to offer support via voluntary benefits that can help mitigate this stress and encourage a happier, healthier workforce."

Financial Wellness Meets Behavioral Economics: Helping Participants See the Big Picture and Act On It (PDF)

12 pages. "[M]any people exhibit a behavioral tendency known as narrow framing, which can lead people ... to allocate their savings to the wrong accounts, choose the wrong health insurance plans and fail to prepare for unexpected financial shocks. This paper outlines a new approach, informed by behavioral economics, that minimizes the problem of narrow framing. For instance, it explains how workers can be nudged to save for emergencies, thus helping them avoid cashing out their retirement savings during a financial shock. It also outlines sample interventions that can be used to help people reduce health care costs."

Financial Benefit Trends to Watch in 2018

"[1] More employers will add financial education benefits.... [2] Financial benefits will become more holistic.... [3] More student loan repayment benefits will become available.... [4] Increased attention will be given to helping employees with short-term financial issues.... [5] Employers will begin to look for ways to provide financial education to future generations."

Is Financial Wellness the Prescription for a Culture of Mental Health?

"[E]mployees aren't the only ones to feel the sting from financial stress. The impact to employers may take the shape of productivity decline, higher employment costs, delayed retirement, etc.... [A] tailored financial wellness program can offer employees a clear path to finding a healthy balance of living for today and feeling confident about the future while working to help employers create a more productive workplace."

Financially Stressed Workers Likely to Draw from Retirement Plans

"More than half of workers (54%) who identify as being financially stressed say they will likely use their retirement funds for expenses other than retirement ... That's compared to 33% of their colleagues who say they're not stressed about finances.... [J]ust 31% of stressed workers say they'd be able to meet basic expenses if they were out of work for an extended amount of time."

What Are Employers Doing to Boost Financial Wellness?

"The most common type of emergency assistance offered is an employee relief or compassion fund (44 percent), followed by part-time donations or leave-sharing (36 percent) and matching contributions to employees' personal accounts (35 percent). Among those that already offer an emergency fund, the average number of such benefits offered was 2.5."

Independent Agents to Suffer Under DOL Rule

"A significant population of insurance agents are not affiliated with a financial institution 'and these independent agencies are seemingly disenfranchised by the rule, absent some future relief from the DOL,' [Alain Karaoglan, of Voya Financial] said. He also said that 60 percent of Voya's sales are conducted through financial institutions and 85 percent of sales are conducted through registered representatives. Those distributors, if they need to affiliate with a financial institution, 'will be able to do so.' Under the new rule, the insurance company or the broker/dealer, not the individual agent, bears the responsibility for assuring fiduciary conduct."

How Visual Imagery Transforms Benefits Decision-Making in the Workplace

"Many employees feel overwhelmed when selecting their benefits. Visual imagery can help simplify these complex choices at a glance.... Tailoring imagery to match behavioral tendencies and known barriers can help improve engagement and lead to smarter financial decisions.... By understanding what truly drives action, we can reshape engagement efforts to eliminate barriers and promote better financial and benefits decisions."