John Hancock Stays Mum on Whether It's a 401(k) Fiduciary
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% So I posed this question: John Hancock, are you, or are you not, a fiduciary to the 401(k) plans you serve?
A reader of my article sent it to his John Hancock representative and asked for a response. Here is the astonishing answer conveyed to him: "John Hancock is not in a position to act as a fiduciary with respect to any particular plan and nowhere in our materials do we say that we are."
Acting Entirely In Its Own Best Interests, Not Yours
One might ask: Why is this significant to the 1.7 million participants in the 42,000 plans advised by John Hancock? W. Scott Simon, an author and leading expert on fiduciary issues in 401(k) plans, discussed this issue in an informative article.
According to Simon, non-fiduciary consultants can "simply pursue their own financial self-interests with no legal obligation to plan participants to ensure that they get the very best investment products at the very best price." Simon observed that non-fiduciaries often accept payments from funds who "pay to play" to be included as investment options in the plan. These payments are legal under current law.
But is it possible that John Hancock is not "in a position" to act in the best interest of plan participants?
To be sure I had this right, I sent my article to the media relations department at John Hancock, together with the response that was forwarded to me. I asked them to check the response for accuracy. I also asked if they accepted "revenue sharing payments" from mutual funds that wanted to be included in the 401(k) plans it advises.
When I received no response, I sent two follow-up e-mails to the media relations person assigned to my inquiry. I never received a reply.
Employees deserve to have an adviser to their 401(k) plans who is looking out for them. Employers should protect those who cannot fend for themselves. The fact that the nation's leading 401(k) service provider will not accept full fiduciary responsibility for the investment options it makes available to plan participants highlights the need for urgent legislative reform of our 401(k) system.
As things stand now, it's not just a thin reed on which employees hoping to retire with dignity are relying. It's a dead one.