Creative Planning, Transamerica Face Suit Over Plan Selections

Creative Planning, Transamerica Face Suit Over Plan Selections The complaint alleges that fiduciaries selected underperforming target date funds; to an industry expert, it illustrates the litigation "risk" for wealth firms converging on the retirement arena. Creative Planning and Transamerica are co-defendants in an ongoing lawsuit accusing plan fiduciaries for a hospital’s retirement plan of ignoring “their duties of prudence and loyalty.” The class action complaint was originally filed in federal court in Florida (before it was transferred to Maryland last week) by Tamara Goucher, an employee at All Children’s Hospital in St. Petersburg, Fla. According to industry analysts, the suit is an example of the litigation risks that accompany the convergence of the wealth and retirement plan spaces. In the complaint, Goucher claimed to have worked for the hospital system for about 30 years. According to Goucher, employees could access two defined contribution retirement plans, including a 403(b) and 401(a) plan. To administer the plans, Transamerica Retirement Solutions provided recordkeeping and administrative services, while Creative Planning served as an additional advisor to the 403(b) option (both were named as co-fiduciaries and defendants in the complaint). Goucher claimed that between 2015 and 2025, the fiduciaries steered many of the plans’ assets into a single asset series: the American Century One Choice Target Date Funds. The funds followed a glide path that was “unusually flat and bond-heavy until the target year,” which Goucher claimed meant participants’ exposure to equities was below typical plans. While the defendants admitted this was a “major detractor” to growth, Goucher claims they failed to replace the American Century TDFs “until long after making this admission” (according to Goucher, they didn’t provide any other options until September 2025). Goucher said the fiduciaries “doubled down” on the “unconventional” choice for over a decade before finally switching to a BlackRock TDF, one of the most popular options in the space. At the start of the class period, the American Century TDF’s 10-year returns lagged the five most popular TDF options at T. Rowe Price, Vanguard, Fidelity, American Funds and BlackRock, according to the suit. Goucher stated that by 2020 and 2021, “any reasonable fiduciary” should have realized American Century underperformed compared to competitors. She also cited Morningstar reports from the time, allegedly giving the American Century options sub-par ratings compared to peers. Additionally, the defendants purportedly selected the American Century TDFs as the 403(b) plan’s qualified default investment alternative, which meant employees were automatically enrolled if they made no investment selection, which created “a heightened duty for fiduciaries to choose a suitable TDF option” to serve in that role. Additionally, Goucher claimed that through the period in question, All Children’s affiliated investment committee, Transamerica and Creative Planning opted for more expensive share classes of funds (including from American Century, PIMCO, Janus Henderson and Invesco), when more affordable options were available. In the complaint, Goucher called the practice “typically imprudent because it ignores the investment opportunity that is lost when participants pay more on the front end.” Creative Planning did not respond to a request for comment. Transamerica declined to comment, citing its policy of not speaking about pending litigation. Fred Barstein, the CEO and founder of The Retirement Adviser and Plan Sponsor Universities, told Wealth Management it would be “very surprising” if the suit was successful, claiming American Century could be argued to be performing as promised, but was just “very conservative in a booming market.” The Goucher complaint is one of several filed in recent months targeting fiduciaries who favored American Century TDFs, typically making similar arguments to Goucher. According to the National Association of Plan Advisers, recent complaints have targeted Ivanti, Sig Sauer, KE Dunn Construction, OneOncology and other employers after they opted for the American Century TDFs. The first such suit, Phillips v. Elanco, was filed last fall. According to NAPA, in the suit, the plaintiffs argued that Elanco Inc. relied too heavily on the recommendation of plan advisor Shepherd Financial Investment Advisory to favor American Century TDFs and waited too long to replace them after prolonged underperformance (akin to the Goucher suit). In the past several years, Creative Planning has bolstered its retirement assets and services, including its 2022 acquisition of Lockton’s $110 billion defined contribution practice (notably, Lockton is a defendant in several other suits related to the selection of the American Century TDFs). Additionally, Creative Planning’s 2025 acquisition of SageView Advisory Group brought in $250 billion and one of the industry’s original retirement-plan-advisor aggregators. The deal created a combined firm with more than 550 advisors, 11,800 retirement plans and 80,000 private wealth clients, adding hundreds of billions in retirement plan assets to Creative Planning’s total. Shortly after the deal announcement, Creative Planning named SageView President Jon Upham to lead the combined retirement solutions division. According to Bonnie Treichel, a founder and chief solutions officer at Endeavor Retirement, the acquisitions will help Creative Planning navigate the litigation minefields of the retirement space by bringing the infrastructure in-house. But she warned that, despite its benefits, the convergence of the wealth and retirement spaces comes with risks for wealth-focused firms. In particular, the regulatory requirements placed on advisors operating under the Employee Retirement Income Security Act can carry significant personal liability that differs from typical RIA or brokerage standards (it’s been at the heart of debates over the numerous iterations of the Labor Department’s “fiduciary rule” and how they could affect advisors). “Specialists who are used to that space, they’re used to doing that all the time,” she said. “A lot of these cases, they result in a settlement; or it’s not actually that the fiduciary did anything wrong, because the standard isn’t that you actually choose the right funds. The standard is that you follow a process, but you might have to litigate for 10 years to get that answer.” Additionally, Treichel noted that these types of cases (in which a class action plaintiff pursues damages against plan fiduciaries for oversight) have proliferated in recent years, due in part to publicly available data on retirement plans via ERISA-mandated federal filings (unlike a wealth firm, where retail investor data is not typically publicly available). “The dollar figures are so different,” Treichel said. “And the way they’re brought are very different, too … in some ways, there’s big money behind bringing these cases.”