Media Turns to Jerry Schlichter for Guidance Following Fidelity Bitcoin Announcement

On April 26, 2022, Fidelity Investments—the largest 401(k) plan provider in the United States with approximately $2.7 trillion assets under its management—announced that it will offer Bitcoin as an investment option in its 401(k) plans. The Department of Labor has expressed concern, citing the volatility of crypto trading. Within this debate, multiple media sources reached out to Schlichter Bogard & Denton Managing Partner Jerry Schlichter for his perspective.

In an article published by Plansponsor, Jerry expressed concerns similar to those of the Department of Labor, stating that “plan sponsors offering Bitcoin in-plan as part of the core investment menu would expose the plan, investment committee[,] and plan participants with myriad risks,” foreseeing that “plan sponsors could be vulnerable to greater litigation risks from the plaintiffs’ bar.” Jerry continued: “I don’t see a way at the current time that a plan sponsor can say it’s in the exclusive best interest of employees to invest in a new kind of investment vehicle that has no long-term track record, that has hefty fees 20-times higher than index funds[,] and has lost 40% of its value in the last six months.”

Speaking with Ignites, Jerry further stated that this “sea change” may, in fact, have been prompted as an opportunity for Fidelity (and other providers) to “recoup money lost as [they’ve] lowered their recordkeeping fees” in response to litigation calling attention to excessive fees in retirement plans. Jerry ultimately described this new avenue as a “whack-a-mole effort to find other revenue sources in 401(k) plans.” He further stated that “employees and retirees want long-term safety in their 401(k) plans.”

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