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Ameriprise faces claims it cheated its own employees

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in Compensation and Benefits,Employment Law,Human Resources

Participants in Ameriprise’s 401(k) plan are suing the investment firm, claiming it operated the retirement program for its own benefit, not its employees and retirees. Among the charges: That it illegally offered its own mutual funds as 401(k) investments, failed to operate the funds in the employees’ interest and charged fees that were too high.

The company, based in Minneapolis, has denied any wrongdoing and disputes the notion that the retirement funds were not run to benefit investors. Ameriprise claims it charged appropriate fees to plan participants.

The company also argues that an exemption in the Employee Retire­­ment Income Security Act permits employers to offer their own products as investment options.

While that may be, observers note that the damage done to the company image may not be worth the fees it collects from its employees. Since investment firms rely on their perceived integrity, they risk a great deal by managing their own 401(k)s and charging market fees.

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