The lawsuit against Ameriprise Financial, the largest employer of certified financial planners in the U.S., was breaking news at the end of last month, as six people accused the company of willfully mismanaging 401(k) accounts, stuffing the plans with expensive, underperforming mutual funds that came from the company’s own investment management arm.
Many similar employee benefits lawsuits have surfaced in recent years, but this is the first against a financial planning firm, and the repercussions could be devastating.
Ameriprise has faced a variety of bad press over the years, including the Medical Capital scandal, in which brokers at Securities America, an Ameriprise unit at the time, sold hundreds of millions of dollars of false medical bill receivables. Ameriprise has since sold Securities America, but the tainted association lives on.
Add this lawsuit to the list of red flags for both consumers and advisors. Whether or not the accusations are true, they deserve thorough investigation.