Northwestern University & the Excessive Fee Standard

The Supreme Court's 2022 ruling in Hughes v. Northwestern University reaffirmed that plan sponsors cannot escape liability simply by offering a broad range of investment options. The decision significantly lowered the pleading threshold for excessive fee claims and has since prompted a sustained wave of litigation against plan sponsors of all sizes — from large university endowments to mid-market corporate plans.

The ruling established that the mere availability of prudent investment options does not insulate a fiduciary from liability for the presence of imprudent ones. Plan sponsors must evaluate each option independently. This has fundamentally changed how investment committee processes, fund lineups, and fee structures are documented and defended.

For plan sponsors, the practical implication is clear: periodic fund reviews, documented watch-list processes, share class optimization analysis, and fee benchmarking against comparable plans are no longer optional — they are the minimum standard of prudent oversight that courts expect to see. Regency works with plan sponsors to build and maintain the fiduciary infrastructure that this standard demands.