Ep #8: How To Win a 401(k) Fee Lawsuit with Diane Gallagher from American Century

Diane Gallagher is Vice President of Value-Add Programs at American Century Investments where she is the firm’s spokesperson on retirement investing and chairs the company's retirement plan committee.

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11/16/2020 - 72 minutes


Episode Summary

My guest today is Diane Gallagher who is Vice President of Value-Add Programs at American Century Investments. She has more than 25 years of communications experience in the retirement industry at both American Century and J.P. Morgan. In her current role, she leads the development of value-add content for financial advisors, plan sponsors and individual investors, on topics ranging from children and money to qualified retirement plan best practices. She also serves as a firm spokesperson on retirement investing and general investment education. And she chairs the American Century retirement plan committee.


On today's episode, we discuss the results and insights from American Century's 8th Survey of Retirement Plan Participants, which was conducted in early 2020, near the beginning of the global pandemic. Diane highlights the regrets that older participants express about not saving earlier, the positive and open attitudes participants have towards aggressively implemented automatic plan design features and the growing interest employees have in holistic advice and retirement income solutions. And be sure to listen to the end where Diane shares her experiences as the chair of American Century's retirement plan committee and being named a defendant in an ERISA lawsuit focused on excessive fees and proprietary investments. Originally filed in 2016, American Century won the case in 2019. It was only the second case to go to trial since 2015. Most importantly, Diane describes the prudent processes that American Century followed that enabled them to decisively win that lawsuit and get the claims dismissed. It's a fascinating, real-world look at why a strong governance process really matters for retirement fiduciaries.


What You'll Learn

  • How Diane sees the evolution of how American's think about retirement.
  • What she recommends in terms of how to optimize retirement plans from a plan design perspective.
  • Key insights from American Century's 8th Annual Survey of Retirement Plan Participants, and how it compares to previous years.
  • The regrets older participants have about not saving for retirement earlier.
  • Some of the differences between how women, men, and different age groups responded to the survey.
  • What employees are looking for in terms of retirement advice and holistic retirement income solutions.
  • Diane’s experience as a named defendant in an ERISA lawsuit.
  • Why meeting minutes are important, not only in case of legal action but also for new committee members to get up to speed.
  • What lessons Diane learned through the lawsuit and how it has changed her approach to being a committee member.
  • How Diane sees the retirement industry evolving over the next 5-10 years.


Links to Resources


Ideas Worth Sharing

  1. “What participants are really looking for is independence, not affluence.” - Diane Gallagher
  2. “We don’t make financial decisions in a vacuum.” - Diane Gallagher
  3. “Be very surgical with your communications.” - Diane Gallagher
  4. “The reality is we can’t let perfect be the enemy of really good.” - Diane Gallagher