Compliance March 18, 2025

JPMorgan Sued for Including ‘Underperforming’ Stable Value Fund in 401(k) Menu

The company was accused of using an in-house stable value investment that underperforms competitors.

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A former employee of JPMorgan Chase Bank N.A. filed a complaint against the company last week, arguing that a stable value investment in the bank’s 401(k) plan performed poorly when compared with other available stable value funds.

In Gonzalez v. JPMorgan Chase Bank N.A. et al., filed in U.S. District Court for the District of New Jersey, plaintiff Alexandro Gonzalez claimed that JPMorgan Chase Bank failed to objectively and adequately review the plan’s investment offerings, initially and on an ongoing basis, with due care to ensure each investment option was prudent in terms of performance.

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As of the end of 2023, the plan had more than $44 billion in assets under management and 295,407 participants. Gonzalez’s complaint argues that, as a jumbo plan, the plan had substantial bargaining power regarding the fees and expenses charged against participants’ investments.

According to the lawsuit, fiduciaries at JPMorgan allowed substantial assets in the 401(k) plan to be invested in the JPMorgan Stable Value Fund that invested in synthetic guaranteed investment contracts offered by MetLife, Prudential Financial, Transamerica and Voya Financial.

GICs are issued by insurance companies in the form of a fixed annuity contract.

“A prudent fiduciary would not have included this underperforming investment option that also carried significantly more risk than other investment options that had similar goals, i.e., preservation of investment assets,” the complaint states.

The complaint also states that a more prudent fiduciary could have demanded higher crediting rates from the insurance companies by submitting requests for proposals to the insurance companies and other providers of stable value investments.

In addition, the plaintiff alleges that the insurance companies “benefited significantly” from participants in the plan investing in the stable value fund. The complaint states that the crediting rates the insurance companies provided to the plan “were and are so low that the insurance companies reaped a windfall on the spread.”

The complaint also accuses JPMorgan of failing to monitor its investment committee to ensure that it was adequately performing its fiduciary obligations under the Employee Retirement Income Security Act.

The plaintiff is asking the court to declare that JPMorgan breached its fiduciary duties under ERISA and order the company both to disgorge all profits received from the plan and to make good on all plan losses resulting from “imprudent investment of the plan’s assets,” among other demands.

Gonzalez is represented by law firm Capozzi Adler P.C. in the case.

JPMorgan declined to comment on the lawsuit.

The bank was also sued last week by current and former health plan participants who allege the company mismanaged the prescription drug benefit under its health insurance offering.

Benefits March 18, 2025

Financial Wellness Tool Shown to Reduce Employee Stress

Survey from FinFit found that workers that have access to and utilize financial tools, make better financial decisions and report feeling more supported by their employers.

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Workers who reported experiencing extreme financial stress saw a 60% reduction after engaging with financial wellness platform FinFit’s tools and resources, according to the company’s recent survey of 540 employees.

There was an overall 48% improvement in the number of employees experiencing anxiety or depression related to financial concerns, per FinFit.

When workers have access to and utilize financial tools, they make smarter financial decisions, reduce stress and feel more supported by their plan sponsors and employers, the FitFIt survey found. 

Employees use the platform for a variety of needs: 42% said it helped them avoid taking out a more expensive loan; 40% said it helped them pay for an emergency expense; and 29% said it help them pay down or pay off higher-cost debt.

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Those who engaged with the wellness platform were significantly less likely to rely on borrowing money, whether from friends, family or their 401(k) accounts. They were also more likely to be up to date on bills: 72% were behind on payments before using the platform, and 41% were behind after.

The survey found a 35% reduction in the number of employees living paycheck to paycheck and 175% growth in the number of employees with some amount of emergency savings.

Communication and Encouragement Needed

Barriers persist to participation in financial wellness programs, especially in the context of privacy concerns and a lack of forward thinking. Speaking at a recent conference, Alexander Alonso, chief data and analytics offer at the Society for Human Resource Management, said, “While 94% of employers claim responsibility for employees’ financial well-being, only 57% act.”

Based on data gleaned from polling 33,000 working Americans, Alonso said 66% of workers believe they are nowhere close to achieving financial wellness or even being literate about what financial wellness should be.

Plan sponsors and their advisers are implementing financial wellness programs that can help shift this dynamic. Research by MetLife showed that the effective delivery of employee benefits resulted in a 1.2x boost in productivity and significantly improved talent outcomes. As employees gain control over their finances, they experience a renewed sense of focus and purpose. 

A positive response can also come as improved engagement with the employer, the FinFit survey found. Nine out of 10 employees consider the financial wellness platform a valuable benefit, and 75% of employees believe their employer truly cares about their well-being because it provides access to FinFit.

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