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On August 15, 2025, plaintiffs’ law firm Schlichter Bogard, LLC, filed a lawsuit on behalf of their clients against Empower (Williams-Linzey et al. v. Empower Advisory Group, LLC; Empower Retirement, LLC; Empower Financial Services, Inc.; and Empower Annuity Insurance Company of America). Plaintiffs’ complaint claims that Empower violated ERSIA fiduciary provisions by improperly using confidential participant data from plans for which it was the recordkeeper to target participants with large account balances nearing retirement age, encouraging those participants to roll their money into its “high-fee-laden ‘Managed Account’ [IRA] program.”
In this article, we briefly review certain key issues raised by plaintiffs that are different from the typical plan sponsor-targeted fiduciary litigation we have seen for the last 20 years.
Plaintiffs claim that Empower abused its position as recordkeeper by:
“[I]mproperly and repeatedly leveraging its position as plan recordkeeper to harvest highly confidential, private financial data concerning retirement plan participants for its economic benefit.”
Using this data “to identify and target certain categories of retirement plan participants, including participants with large account balances nearing retirement age.”
Approaching targeted retirement plan participants and “falsely portray[ing] Defendants’ high-cost Managed Account program as the superior – and in fact the only – recommended investment option, regardless of whether the Managed Account program was actually in the best interests of retirement plan participants.”
Falsely claiming that Empower provided “individualized investment advice … based on the needs of retirement plan participants,” while in fact the program uses “seven preset asset allocations, which are heavily populated with investment funds offered by Empower.”
Concealing sales representatives’ conflicts of interest by requiring them to “falsely claim that their recommendations were objective and non-commissioned – when in fact Empower’s bonus structure created significant financial incentives.”
There are a number of issues in this case that, if it develops further, will deserve attention. But at this very early stage, we are only going to focus on a set of issues that plaintiffs raise that are unusual:
This is a suit against the provider, not the plan sponsor.
The complaint alleges that Empower – which functioned primarily as a plan recordkeeper (an administrative, not a fiduciary function) – was nevertheless a fiduciary.
The bases for the claim that Empower was a fiduciary are that it “appropriated” discretionary fiduciary authority when it improperly used participant confidential information to “cross-sell” its managed account IRA product to plan participants. Its “one-shot” rollover advice triggered ERISA advice fiduciary status.
In nearly all ERISA fiduciary litigation to date, plaintiff-participants have sued the sponsor and sponsor fiduciaries, not the provider/recordkeeper. That is because the sponsor is clearly a fiduciary under ERISA, while the recordkeeper is generally considered a “mere service provider.”
We discuss the plaintiffs’ argument for why Empower is a fiduciary below. Here we note two things about this sue-the-provider strategy:
Casting the provider as defendant allows plaintiffs (and their attorneys in this class action) to sue (and claim relief/damages with respect to) all the plans Empower is recordkeeper for, increasing (by orders of magnitude) the dollar value of this lawsuit.
Notwithstanding that they are not suing the plan sponsors of the plans for which Empower is recordkeeper, plaintiffs do allege that, with respect to Empower’s cross-selling activity, those sponsors “failed to act as prudent fiduciaries would have under the circumstances and caused prohibited transactions.” The complaint maps out the factual basis for a (separate and unfiled) lawsuit against sponsors for not restricting Empower’s use of participant data and cross-selling activity. Sponsors will want to consider whether they should reconsider their attitude towards this sort of cross-selling, IRA/rollover marketing activity engaged in by their recordkeepers.
As we noted, the complaint asserts that Empower was a fiduciary because:
It used confidential information “to identify and target certain categories of retirement plan participants, including participants with large account balances nearing retirement age.”
It provided fiduciary investment advice with respect to rollovers.
Empower’s use of participant information made it a fiduciary: ERISA provides that a person is a fiduciary if they “exercise … any discretionary authority or discretionary control respecting management of [a retirement] plan or exercise … any authority or control respecting management or disposition of its assets.”
Plaintiffs argue that Empower – in “improperly appropriat[ing] … confidential [participant] information [and] using its access to this confidential information to aggressively market its high-cost non-plan products” – was exercising discretionary control of plan management and was therefore a fiduciary.
Empower was also an “advice fiduciary”: We have provided copious discussions of who is an “advice fiduciary” under ERISA and under the various attempts to define that term via regulations. (See, e.g., Federal court vacates DOL’s interpretation of the five-part test as it applies to certain rollovers, but otherwise affirms DOL’s view.)
Plaintiffs, in the Empower complaint, argue that, “[u]nder the statute’s [that is, under ERISA’s] plain text, Defendants received a fee or other compensation … for providing advice. … Under the plain meaning of the statute, nothing more is required to establish fiduciary status.”
We’re not going to go into this issue in detail at this point (remember, this is only a complaint, the very first stage of a lawsuit). But we want to note that plaintiffs’ argument here implicates the Supreme Court’s recent decision in Loper Bright Enterprises et al. v. Raimondo, overturning the Chevron Doctrine, and holding that (oversimplifying somewhat) courts are under no obligation to follow agency guidance in interpreting a statute. On that basis, plaintiffs argue that – simply based on the statute – one-time investment advice (with respect to a rollover) is fiduciary advice. We note that, in its recent decision in Federation of Americans for Consumer Choice v. United States Department of Labor, the United States District Court Northern District of Texas also took this view of the statute.
That argument disregards DOL’s (regulatory) five-part test for investment advice, which (among other things) requires that the advice be provided on a “regular basis,” a requirement that several courts have found requires more than one instance of investment advice.
This issue – the status of DOL’s five-part test for investment advice (which DOL itself has tried to re-interpret) vs. “the statute’s plain text” – was very much put in play by Loper Bright and is being raised here by plaintiffs.
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We want to re-emphasize: this is just a Complaint. At some we will get an Answer from defendants, that is likely to dispute plaintiffs legal and factual claims.
We will continue to follow this issue.