Et tu, Matthew?
Posted on November 11, 2011
Filed Under 401K, Investor Mistakes, Mutual FundsI thought I couldn’t be shocked anymore with stories about mis-deeds in the financial world. But this article really set me back on my heels.
Matthew Hutcheson is, or perhaps I should say – was – a man I respected greatly. He has been a highly visible leader in the fight to protect employees from retirement plan rip-offs. While I personally tried hard over a number of years to bring publicity to the problems of hidden fees in 401(k) plans (I even had a meeting in the offices of then-Attorney-General of New York, Elliot Spitzer, about the problem), Matthew managed to appear before Congress, telling them in clear and ringing terms that the system was rife with problems. His White Paper on the subject became our go-to resource for understanding some of the more arcane wrinkles in the complicated world of corporate retirement plans.
Now he is suspected of serious wrong-doing, including breaching his fiduciary responsibilities – the very cause he championed. I fully recognize that the allegations made in the article are not convictions. However the story, sadly, does seem to strongly delineate a pattern of fiduciary sloppiness – at best.
My heart goes out to the people who are now fighting to get their hands on their retirement money.
What could, or should, the employers have done differently?
First and foremost, we have always urged employers to place corporate retirement money with nationally-known mutual fund custodians such as Fidelity, Schwab or Vanguard or at least with a major insurance company (although I am not a fan of their generally higher fee structures). That simple step, instead of placing the money with Hutcheson’s proprietary firm, almost certainly would have precluded the problems now faced by these innocent workers.
If the charges against Matthew Hutcheson prove true, it will be an astonishing fall from grace for a man who, more than almost anyone else in America, should have known better.
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