Love Letters from Yale

We have recently learned that a Yale Law School professor has sent a letter to thousands of 401(k) plan sponsors. The professor is doing a “study” on the financial impact of plan fees and has identified the employers receiving the letter as sponsoring a “potential high-cost plan.” According to the letter, this determination is based on Form 5500 data compiled by BrightScope and the rankings they assign to 401(k) plans.

The letter says the findings of the study are expected to be published in Spring 2014, including distributing the findings to news media and through social media, with the corporate names of identified plan sponsors highlighted. The letter “reminds” the plan sponsors that “fiduciary duties are the most stringent imposed by the law, and require administrators to act solely in the interest of the plan participants.”

To view a redacted copy of one letter, click here.

The tone of these letters, frankly, is shocking. Here we have employers offering retirement benefits to their workers (which is entirely voluntary, by the way) and this Yale Law School professor is essentially threatening them. And the threat is based on some study that is based on inherently flawed data:

• The data is old — 2009 Form 5500 data — and insufficient to make any meaningful relative comparisons.
• The data is incomplete since it ignores fees paid directly by the plan sponsors, thus not allowing for a complete assessment of the reasonableness of aggregate fees.
• The data does not take into account the relative complexity of the plan design.
• The data does not factor in levels of service or relative performance, including whether a professional plan advisor is helping the plan sponsor and participants.

Even the Government Accountability Office, in a recent study, recognized the inherent limitations of the Form 5500 data on the ability to comprehensively assess plan fees. As such, we reached out to the professor last week in an attempt to explain the significant flaws in the data to him. He declined our invitation, indicating that his heavy workload precluded a phone call.

As several NAPA members have pointed out, evaluating plans without complete information is like evaluating Yale while ignoring the quality of education that students receive, then saying that Yale is a high cost university since it ranks in the top 5% of schools in terms of tuition cost. Quality of product, like quality of education, is a critical part of the equation.

With all the challenges facing American workers today as they prepare for retirement, the last thing we need is unreasonable threats being made against the sponsors of the very plans these workers rely on. If you share these concerns and have plan sponsors that have received this letter, please contact Ray Harmon, Government Affairs Counsel, at We’re currently evaluating what options may be available, and we’d like to include your input.

Brian Graff is the CEO/Executive Director of ASPPA and NAPA.

Add Your Comments


  1. Steven Glasgow
    Posted July 15, 2013 at 11:40 am | Permalink

    Hmmm…a professor at Yale creating a stink where the inimitable answer (as always) is to socialize the system and let the government take over with central planning? Who woulda thunk it?

  2. Bill Monroe
    Posted July 15, 2013 at 12:02 pm | Permalink

    Apparently, Professor Ayres has difficulties with academic integrity. Why should anyone credit his research?

    See following excerpt from his wikipedia profile:


  3. David Witz
    Posted July 15, 2013 at 12:16 pm | Permalink

    Brian – thank you for taking the lead on this.

  4. Lon Burford
    Posted July 15, 2013 at 12:54 pm | Permalink

    Sloppy, outdated data. Publish it and then demand that the recipients correct the information. Sounds just like Brightscope.

  5. Jeffrey Bennett
    Posted July 15, 2013 at 1:10 pm | Permalink

    Ignorant and reckless – a lethal combination.

  6. Carol Buckmann
    Posted July 15, 2013 at 2:26 pm | Permalink

    Apart from the flawed methodology and old data (all they have to do is use freeERISA to get more current information), the tone of this letter is very troubling. The Department of Labor apparently has a database with plan fee information. We can only hope that the DOL doesn’t adopt this data and start targeting plans it identifies as high fee plans for examination. ERISA does not require hiring providers with the lowest fee without regard to quality of service. it is important to discredit this study publicly and soon.

  7. Elmer Rich Iii
    Posted July 15, 2013 at 2:44 pm | Permalink

    If ever there is misinformation and trouble – Brightscope is usually involved. Time to call an attorney and sue.

  8. Dave
    Posted July 15, 2013 at 3:56 pm | Permalink

    One of my clients recieved this letter and is very upset. Everytime Brightscope is involved their data is very misrepresented. I spoke to Dan Weeks of Brightscope on the phone and he admitted they have no way of determining if the fees listed are mandatory fees or as a result of a special option selected by participants. In my case many of the larger account holders were using an advice service that charged a 55 bps fee and totalled about $6,000 for the plan. Brightscope added that number to the plan fees paid by participants. This fees is not mandatory and is clearly misrepresenting the basic fees fo the plan.
    When I look up this company on their website it shows it as having highest fees in RED. When I asked Mr. Weeks for further details he then said if I was a paying memeber the report I can get compares it to plans closer in size (1-10 million) and the plan then had High fees in ORANGE on the graph. Like any one knows the fees on 401k can be adjusted at much tighter levels than a ten million dollar spread and this plan was at three million on hte lower end of that scale. Mr. weeks regected the idea of doing a comparison of plans from 1 to 5 million but did conceed that if they took out the $6,000 in voluntary fees that they would be much more competitive.
    It is amazing how loosly they can present this data and the kind of tactics that they will go to to bring in business.
    I hope they soon have to follow the same fiduciary standards that advisers and sponsors are held to …….that would change their world.

  9. Mark Branish
    Posted July 16, 2013 at 10:26 am | Permalink


  10. Dave
    Posted July 16, 2013 at 11:00 am | Permalink

    Professor Ayers is in behaving recklessly in participating in what I would think most people would consider a veiled threat to plan sponsors. The only way you can get accurate reports from Brightscope is to join their service for about $700. Its obvious that this a a tactic to drive membership but they are grossly misrepresenting the data and for a professor at Yale to attach his name and the schools reputation to this scam is outrageous and I’ve already made a call to Yale’s Law School and just like Brightscope there is no one there is no one around to take accountability for this writing.
    Cowardice by both Brightscope and Ian Ayers to say the least.

  11. Bill Bowden
    Posted July 16, 2013 at 11:27 am | Permalink

    May I suggest you also use tools designed to advance/preserve academic integrity? He has previously been implicated in plagiarism. He is now planning to go to popular press with “research” that will not be peer reviewed in a blind process. He has an agenda and is inappropriately selecting from the data to support his conclusions. I’m guessing this work does not meet Yale’s own research and publication standards. His students are likely held to a higher standard. Of course, if the WSJ and NYT already know that his research is unreliable, they might turn the tables on him, which would reflect unfavorably on Yale.

  12. Mel Fleeman
    Posted July 16, 2013 at 5:58 pm | Permalink

    I’m curious where the Yale retirement plan ranks in relation to other school plans regarding expenses. I would think the professor would at least analyze the program he is subject to before he goes out into the for-profit world and starts to sow discontent. I like to see critics look in the mirror and get their own house in order before they start firing off threats.

  13. Dean
    Posted July 17, 2013 at 2:30 pm | Permalink

    Where Brightscope goes, flawed methodology and questionable data follows.

    There are better ways to address high fees and participant inertia.

One Trackback

  1. By Heretic Thursday: Ian Ayres on August 29, 2013 at 10:02 am

    […] arguments against Ayres are many—old data, incomplete information, complexity of products—and many […]

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