A recent lawsuit has brought to light potential conflicts and missteps in the management of retirement plans, underscoring the complexities and risks involved when wealth management and retirement planning services converge. The ongoing legal battle highlights the critical importance of fiduciary duty and prudent investment selection for the financial well-being of plan participants.
Details of the Retirement Plan Litigation
In a significant legal development, Creative Planning and Transamerica are currently embroiled in a class-action lawsuit. The complaint, initially lodged in a Florida federal court before its recent transfer to Maryland, accuses these firms, serving as fiduciaries for a hospital's retirement plan, of neglecting their essential responsibilities of prudence and loyalty. The lawsuit was initiated by Tamara Goucher, a long-term employee of All Children's Hospital in St. Petersburg, Florida.
Ms. Goucher, who has served the hospital system for approximately three decades, alleges that the retirement plans offered to employees—specifically a 403(b) and a 401(a) plan—were mismanaged. Transamerica Retirement Solutions was responsible for the recordkeeping and administrative services, while Creative Planning acted as an additional advisor for the 403(b) plan. Both entities are named as co-fiduciaries and defendants in the legal proceedings.
The core of the complaint centers on the period between 2015 and 2025, during which, Ms. Goucher claims, the fiduciaries channeled a substantial portion of the plans' assets into a single investment product: the American Century One Choice Target Date Funds. She argues that these funds followed an "unusually flat and bond-heavy" glide path, leading to lower equity exposure for participants than typically seen in comparable plans. Despite the defendants reportedly acknowledging this as a "major detractor" to potential growth, Ms. Goucher contends that they failed to replace these underperforming funds until significantly later, only introducing alternative options in September 2025.
Furthermore, Ms. Goucher asserts that the fiduciaries "doubled down" on this unconventional investment choice for over a decade before eventually transitioning to a BlackRock Target Date Fund. Evidence presented in the suit suggests that at the outset of the class period, the American Century TDF's 10-year returns lagged behind the five most popular TDF options from industry leaders such as T. Rowe Price, Vanguard, Fidelity, American Funds, and BlackRock. By 2020 and 2021, any reasonable fiduciary, according to Ms. Goucher, should have recognized the American Century funds' underperformance, a view reinforced by contemporary Morningstar reports that allegedly assigned sub-par ratings to these options.
Adding another layer to the allegations, the defendants purportedly designated the American Century TDFs as the 403(b) plan's qualified default investment alternative. This meant employees who did not actively select investments were automatically enrolled in these funds, thereby imposing a heightened duty on fiduciaries to choose an appropriate TDF option for this crucial role. Additionally, Ms. Goucher claimed that more expensive share classes of various funds were chosen over more affordable alternatives, a practice she described as "typically imprudent" due to the lost investment opportunity for participants.
In response to inquiries, Creative Planning did not provide a comment, and Transamerica declined to comment, citing its policy regarding pending litigation. Fred Barstein, CEO of The Retirement Adviser and Plan Sponsor Universities, expressed skepticism about the suit's success, suggesting that American Century's performance could be seen as conservative rather than flawed, especially in a booming market.
This case is not isolated; it is part of a growing trend of similar lawsuits targeting fiduciaries who favored American Century TDFs. The National Association of Plan Advisers has noted recent complaints against various employers, including Ivanti, Sig Sauer, and KE Dunn Construction, mirroring the arguments in Ms. Goucher's suit. Notably, Creative Planning has significantly expanded its retirement assets and services through acquisitions, including the 2022 acquisition of Lockton's defined contribution practice and the 2025 acquisition of SageView Advisory Group, which brought in substantial retirement plan assets and expertise.
Bonnie Treichel, founder of Endeavor Retirement, believes that these acquisitions could help Creative Planning better navigate the intricate regulatory landscape of the retirement space. However, she cautions that the convergence of wealth and retirement services introduces significant risks for wealth-focused firms, particularly due to the stringent personal liability standards under the Employee Retirement Income Security Act, which differ from typical RIA or brokerage standards. Treichel also points out that the proliferation of such class-action cases is partly fueled by the public availability of retirement plan data mandated by ERISA, making it easier for plaintiffs to identify potential damages and pursue legal action, often involving substantial financial stakes.
This ongoing litigation serves as a stark reminder for financial institutions and plan fiduciaries of the profound responsibilities they bear in managing retirement assets. The outcome of this case, and others like it, will undoubtedly shape future practices and regulations within the wealth and retirement planning sectors, emphasizing the need for meticulous due diligence, transparent investment strategies, and an unwavering commitment to the best interests of plan participants.
