My Latest Broadcast Retirement Network Interview—and Why Artificial Intelligence May Be the Biggest Transparency Tool Retirement Investors Have Ever Had
By Christopher B. Tobe, CFA, CAIA
In my latest interview with Jeffrey Snyder on the Broadcast Retirement Network, we talked about 401(k) litigation, target-date funds, annuities, collective investment trusts and private markets. https://www.youtube.com/@BroadcastRetirementNetwork
But underneath all those subjects is a much bigger story.
Artificial intelligence is radically changing who has the ability to investigate Wall Street.
I know because I am using it.
For decades, much of the retirement industry’s business model benefited from an enormous information advantage.
A large insurance company might have hundreds of contracts.
A private-equity manager might have hundreds of partnerships.
A target-date fund might contain funds inside funds.
A public pension might have hundreds of alternative-investment relationships.
A collective investment trust might be regulated by an obscure state banking regulator with documents scattered across multiple databases.
The information wasn’t necessarily nonexistent.
It was frequently just too expensive, fragmented and time-consuming for anyone to assemble.
AI is beginning to destroy that advantage.
Bloomberg Showed What Happens When AI Meets the 401(k) Black Box
Bloomberg used artificial intelligence and extensive data analysis to examine a market that historically has been extraordinarily difficult to map.
That matters because CITs have grown into a roughly $6–$7 trillion market rivaling mutual funds, while disclosure remains fragmented among federal and state regulators and no regulator appears to possess a complete picture of the marketplace.
That is remarkable.
We have trillions of dollars of American retirement savings sitting in investment vehicles for which the public lacks anything resembling the SEC’s centralized mutual-fund disclosure system.
Bloomberg used technology to begin putting that puzzle together.
I have been trying to do something similar on a much smaller scale.
AI Gives every Participant the power
A smart participant say someone who is an engineer or almost any business background, by putting their statement and 5500 in AI and could know more than historically plan sponsors and even their advisors. On issues like fees which many plans and most advisors have tried to ignore now become transparent.
In the hands of an expert AI can tear apart almost any 401k plan and sort out the ones that should be litigated.
A smart plan sponsor would put their plan in AI and ask what is wrong? But their advisors will discourage doing this to protect their jobs.
AI makes expertise scalable.
I can ask questions today that would have been economically unrealistic for an independent researcher to ask five years ago.
Follow the Money—At Machine Speed
This is where things become uncomfortable for Wall Street.
AI is increasingly good at connecting information that institutions have historically disclosed separately.
Each document by itself may tell you relatively little.
Connect 50 of them and you may have a story.
That is exactly the kind of work AI makes dramatically easier.
The Most Important AI Skill Is Still Knowing What Doesn’t Smell Right
AI is not magic. It makes mistakes.
Every important finding still needs to be verified against original documents.
But that misses the real significance of the technology.
An experienced investigator often knows that something doesn’t make sense long before he can prove why.
Those questions come from experience.
AI allows the investigator to pursue dozens of them simultaneously.
Human skepticism + investment experience + AI research capacity is an extraordinarily powerful combination.
The 401(k) Industry Was Built for an Information-Scarce World
A surprising amount of retirement regulation assumes that information is expensive.
Participants cannot investigate everything, so give them standardized disclosures.
Plan committees cannot analyze everything, so hire consultants.
Regulators cannot inspect everything, so require periodic filings.
Courts cannot reconstruct every investment decision, so rely upon benchmarks and fiduciary process.
Wall Street learned to operate inside those limitations and lack of transparency.
Complexity became protection.
Fragmentation became protection.
Scale became protection.
Put something inside another fund and it becomes harder to see.
Put it inside a CIT and disclosure may decline further.
Put a private fund inside the CIT and another layer appears.
Put an insurance contract underneath it and another appears.
Twenty years ago, following that chain might have required a team of lawyers, accountants and investment professionals.
Today an experienced investigator with AI can start pulling those layers apart from a laptop.
AI Could Be Particularly Dangerous to Hidden Fees
Wall Street can defend a disclosed 40-basis-point fee.
It is much harder to defend economics nobody disclosed.
This is why I think insurance products deserve particular attention.
If participants receive 2% while an insurer earns substantially more on the underlying portfolio, the economic difference can dwarf the tiny mutual-fund expense-ratio disputes that have dominated ERISA litigation.
Historically, determining those economics was difficult.
AI makes it increasingly possible to combine crediting rates, insurer portfolio yields, statutory filings, product documents, competitor rates and plan disclosures.
The same principle applies to private equity.
Private credit.
Real estate.
CITs.
Target-date funds.
Consulting relationships.
Revenue sharing.
And conflicts of interest.
Opacity becomes less valuable when computers can connect the disclosures you scattered across 20 different places.
Bloomberg Has Resources. Now Individuals Have Leverage Too.
Bloomberg’s investigation demonstrates what sophisticated technology and financial data can accomplish at institutional scale.
But the more revolutionary development may be happening below Bloomberg’s level.
Independent investment professionals. Even individual retirement-plan participants.
They increasingly have access to analytical capabilities that once belonged almost exclusively to large financial institutions.
The information advantage is narrowing.
That could ultimately matter more to retirement investors than another thousand pages of regulation.
This Is Why Wall Street’s Move Toward Complexity May Backfire
Private markets are arriving in 401(k)s at exactly the wrong historical moment for secrecy.
Wall Street is moving toward investments with: More complicated contracts. More subjective valuations. More layers. More affiliated entities. More private credit. More insurance structures. More state-regulated CITs.
Less standardized disclosure. That strategy assumes complexity will continue protecting the industry from scrutiny.
AI is making the opposite bet.
The more complicated the structure becomes, the more relationships there are for machines to discover.
The more documents scattered among regulators, the more documents there are to connect.
The more affiliated entities involved, the more potential conflicts can be mapped.
The more complicated the money trail, the more valuable automated analysis becomes.
Wall Street is building increasingly complicated haystacks at precisely the moment AI is getting extraordinarily good at finding needles.
I don’t believe AI replaces investment professionals, lawyers, journalists or regulators.
It does something potentially more important.
It dramatically increases their reach.
An experienced investment professional can investigate thousands of plans instead of dozens.
A journalist can connect records scattered among regulators.
A plaintiff attorney can identify potential fiduciary problems before discovery.
A pension trustee can independently test what consultants are telling the board.
And participants may eventually be able to ask questions about their retirement investments that previously required institutional research departments to answer.
For decades, complexity gave Wall Street an enormous advantage.
CFA Institute’s new continuation-fund report exposes a bigger pension problem: GP-controlled transactions can potentially manufacture valuations, move performance between funds, crystallize carry and turn smoothed private-market marks into something that looks like independent price discovery.
Now it may have found a way to make that valuation problem look like a market transaction.
In my recent CommonSense piece, “Private Equity’s New 401(k) Sales Pitch: Fake Diversification From Smoothed Numbers,” I explained the basic problem:
Smoothed NAV → artificially low measured volatility → artificially low correlation → artificially attractive Sharpe ratio → apparent diversification benefit.
Private equity doesn’t necessarily become less risky because its reported price moves less often.
The ruler changed.
Now a new CFA Institute report on continuation funds raises an even more troubling question:
What happens when the private-equity manager can effectively sell an asset from one fund it manages to another fund it manages—and then point to that transaction as evidence of value?
That matters to public pensions today.
It matters to insurance-company portfolios stuffed with private assets.
And as Wall Street pushes private equity and private credit into 401(k) target-date funds, it could become an enormous ERISA fiduciary problem.
What Is a Continuation Fund?
The basic transaction isn’t complicated.
A private-equity GP owns a company through an existing fund.
Normally we would expect the eventual exit to be something like:
PE Fund → Independent Buyer → Cash
The independent buyer establishes something approaching a real market price.
A continuation transaction can look very different:
Old PE Fund ↓ Portfolio Company ↓ Continuation Fund controlled by the same GP ↓ Same Portfolio Company
Existing investors may cash out or roll their interests into the continuation vehicle. New investors may come in.
But the GP can remain in control of the asset before and after the transaction.
That means something extraordinary has happened:
The GP is effectively involved on both sides of the transaction.
CFA Institute’s new report doesn’t dismiss this conflict. It puts it front and center.
The GP may organize the sale process, negotiate the price, manage the legacy fund selling the asset and then manage the continuation vehicle buying it.
That’s not necessarily wrongdoing.
But don’t call it the equivalent of selling Ford stock on the New York Stock Exchange.
The Manager Can Have an Incentive for a High Price—or a Low Price
This is one of the most fascinating parts of the CFA report.
You might assume a PE manager always wants the highest possible valuation.
Not necessarily.
A higher continuation-fund price can benefit the legacy fund.
It may:
improve reported returns;
increase DPI;
increase IRR;
crystallize carried interest;
strengthen the GP’s historical track record; and
make the manager look better when raising its next fund.
But the GP can also have reasons to favor a lower transaction price.
A lower purchase price gives the continuation fund a lower starting basis.
That potentially creates more upside in the new vehicle—and another opportunity for future carried interest.
Think about what that means.
The manager doesn’t necessarily have a simple incentive to inflate the asset.
It can potentially have discretion over where it wants the performance to appear.
Legacy Fund A needs better performance?
A higher transaction value can help.
Continuation Fund B needs an attractive future return?
A lower starting value can help.
And the same GP can be involved with both funds.
That isn’t conventional price discovery.
It is a conflict that every pension trustee and ERISA fiduciary should understand.
From “Volatility Laundering” to “Transaction Laundering”
My August 15 article examined how stale and discretionary private-market valuations can produce an illusion of lower risk.
Public stocks are priced every trading day.
Private assets frequently aren’t.
If the S&P 500 drops 20%, we know it immediately.
A private-equity portfolio company may not receive a comparable markdown for weeks or months.
That produces the familiar chain:
Stale marks → lower reported volatility → lower measured correlation → better Sharpe ratio → apparent diversification.
An optimizer doesn’t know that one return series represents continuously traded securities while the other represents periodically estimated values.
It just sees numbers.
Garbage risk statistics in → fiduciary-looking efficient frontier out.
Continuation funds potentially add another layer.
Instead of:
GP estimate → NAV
we can get:
GP estimate → GP-organized transaction → GP-controlled continuation vehicle → “transaction price” → NAV
Suddenly an internally influenced valuation can acquire the appearance of external validation.
That is much more powerful.
The manager can say:
“This isn’t merely our mark. A transaction occurred at this price.”
Fine.
Then the fiduciary should ask:
Who was really on the other side of the transaction?
A $100 Million Example
Suppose a PE manager carries a company at:
$100 million.
Imagine a genuinely independent secondary buyer would pay only:
$85 million.
That’s important information.
The real market might be telling the pension fund that its $100 million asset is worth closer to $85 million.
But instead of accepting that independent-market discount, the GP organizes a continuation vehicle transaction at $100 million.
The legacy fund can now report something resembling a $100 million realization.
DPI may improve.
IRR may improve.
Carry may be crystallized.
The GP continues managing the company.
The continuation fund starts with a $100 million investment.
Five years later, suppose the company is finally sold to a truly independent buyer for $150 million.
Now the GP’s performance presentation can potentially tell two attractive stories:
Legacy fund: Successful $100 million realization.
Continuation fund: $100 million investment became $150 million.
But economically, the GP never really exited the investment at $100 million.
It moved the asset from one vehicle it managed to another vehicle it managed.
There may have been only one genuinely independent market price:
$150 million.
Public Pensions Should Be Particularly Concerned
This fits almost perfectly with CFA Institute research by Richard Ennis on what he calls “volatility laundering.”
Ennis looked at secondary-market discounts to reported private-market NAV.
The discounts he cited were striking:
Asset
Approximate Secondary-Market Discount to NAV
Buyout
6%
Private Credit
15%
Real Estate
26%
Venture Capital
30%
All Private Assets
12%
That is a huge issue for public pensions.
If a pension reports a private asset at $100 million while independent secondary buyers would pay only $85 million, which number should taxpayers and trustees care about?
Probably both.
Yet the pension’s annual report may prominently display the $100 million NAV.
This can potentially flow through the entire pension reporting system:
GP valuation ↓ Continuation transaction ↓ Pension NAV ↓ Private-equity return ↓ Total-fund return ↓ Benchmark comparison ↓ Reported “alpha” ↓ CIO/manager compensation ↓ Trustee and taxpayer perception
This isn’t merely an accounting technicality.
Performance numbers determine reputations, bonuses, asset allocations and hundreds of billions of dollars of future commitments.
Did the Pension Really Realize Anything?
Here’s another question pension trustees should start asking.
Suppose a pension owns the legacy fund.
The portfolio company moves into a continuation vehicle.
The pension elects to roll its investment.
Did the pension really experience an economic realization?
Or did an accounting event occur while substantially the same economic exposure continued?
Those aren’t necessarily the same thing.
A pension report showing improved DPI or a realization could leave trustees with a very different impression than:
We still own exposure to substantially the same company through another vehicle managed by substantially the same manager.
That distinction belongs in pension investment-committee minutes.
Insurance Companies May Be an Even Bigger Problem
Now apply this to insurance companies.
Insurance-company portfolios increasingly contain private credit, private equity, structured investments and other assets without transparent daily market prices.
In some cases the insurer, asset manager, private fund, financing entities and related investment vehicles can exist within interconnected corporate ecosystems.
That makes the valuation question extremely important.
A regulator, policyholder, pension fiduciary or annuity purchaser shouldn’t merely ask:
“Was there a transaction?”
They should ask:
“Was there a genuinely independent transaction capable of establishing fair market value?”
Those are very different questions.
If an affiliated or closely connected asset manager controls the investment before the transaction and continues controlling it afterward, calling the resulting number “market value” deserves scrutiny.
For an insurance company, asset values can ultimately affect perceptions of:
investment performance;
asset quality;
capital strength;
surplus;
creditworthiness;
liquidity; and
the safety of liabilities backing annuities and retirement benefits.
This deserves considerably more attention from state insurance regulators.
Now Put This Inside a 401(k) Target-Date Fund
This is where continuation funds become an ERISA issue.
Wall Street wants the next generation of target-date funds to contain things like:
Public Stocks + Bonds + Private Equity + Private Credit + Real Estate + Annuities
The sales pitch is diversification.
But as I discussed in my August 15 CommonSense article, mixing daily-priced public securities with manager-valued private assets can produce misleading volatility and correlation statistics.
Now imagine some of those private investments also move through continuation vehicles.
The participant sees:
“2055 Target Retirement Fund.”
The investment committee sees:
“Improved diversification.”
Underneath that simple name could potentially sit:
401(k) ↓ Target-Date CIT ↓ Private-Market Fund ↓ PE Partnership ↓ Continuation Vehicle ↓ Portfolio Company
And somewhere down that chain somebody has to decide what that company is worth.
That valuation eventually works its way back into the participant’s retirement account.
ERISA Fiduciaries Cannot Outsource Common Sense
ERISA doesn’t require an investment committee to become an expert private-equity appraiser.
It does require a prudent process.
A fiduciary considering a target-date fund containing private assets should therefore understand how those assets are being valued.
Continuation funds make that obligation more important—not less.
A consultant shouldn’t be allowed to walk into an investment committee meeting and say:
“The asset was independently validated by a market transaction.”
without somebody asking:
Who controlled the seller?
Who controlled the buyer?
Who selected the bidders?
Who established the valuation?
Who received carried interest?
Who continued earning management fees afterward?
Those aren’t obscure technical questions.
They’re basic fiduciary questions.
The Plaintiff’s Discovery Request Almost Writes Itself
Suppose a 401(k) plan eventually gets sued over a target-date fund containing PE interests that participated in continuation transactions.
Plaintiff counsel should request:
Legacy-fund NAV immediately before each continuation transaction.
Continuation-fund transaction price.
Every independent bid received.
Bid-price ranges.
Secondary-market indications of value.
Fairness opinions and independent valuations.
Valuation methodologies and assumptions.
Changes in valuation methodology before the transaction.
GP carried interest crystallized in the legacy fund.
Carry terms in the continuation vehicle.
Management fees before and after the transaction.
Percentage of existing LPs that rolled.
GP investment in the continuation vehicle.
IRR and DPI immediately before and after the transaction.
Performance presentations used in subsequent fundraising.
Investment-consultant analysis presented to the ERISA committee.
Any analysis comparing the transaction price with a genuine third-party sale.
Then ask one very simple deposition question:
“You called this a market transaction. Who was the independent buyer?”
The answer could become interesting.
Six Numbers Every Fiduciary Should Demand
My earlier CommonSense article suggested that before accepting the claim that private equity reduces target-date-fund risk, fiduciaries should demand six numbers:
Reported PE volatility. Unsmoothed PE volatility. Reported stock/PE correlation. Unsmoothed stock/PE correlation. Stress-period correlation. Secondary-market discount to NAV.
Continuation funds justify adding several more:
Pre-transaction NAV. Continuation transaction price. Highest independent bid. Lowest independent bid. Carry crystallized at the transaction. Legacy-fund IRR before and after the transaction.
Put those numbers side by side.
You may learn considerably more than you will from a 70-page consultant presentation.
Bottom Line
Private equity already has an enormous advantage over public markets:
It largely controls when changes in value appear in reported returns.
That can suppress measured volatility and correlation.
Continuation funds potentially add another advantage:
The manager can participate in creating a transaction around its own valuation.
That doesn’t mean every continuation fund is improper.
It doesn’t mean every continuation-fund price is manipulated.
And it certainly doesn’t mean every transaction violates ERISA.
But CFA Institute’s own analysis demonstrates why fiduciaries shouldn’t automatically treat these transactions as independent price discovery.
When the same manager can influence the seller, buyer, transaction process, valuation, carried interest and subsequent management of the asset, a transaction price deserves considerably more scrutiny than an ordinary arm’s-length sale.
For public pensions, the danger is that valuation smoothing can become performance smoothing.
For insurers, questionable private-market marks can potentially obscure the economic risk sitting behind retirement guarantees.
And for ERISA plans, the problem may eventually be even simpler:
A fiduciary can’t claim private equity reduces risk because its reported prices don’t move—and then accept a GP-controlled continuation transaction as proof that those same reported prices were market values.
Private equity doesn’t become less volatile because nobody marks it down.
And an estimated price doesn’t necessarily become a market price merely because the manager sells the asset to another fund it manages.
Public pension pay-to-play does not have to look like an envelope of cash handed to a trustee.
There is a much more respectable-looking system.
Investment managers, private-equity firms, consultants, insurers, custodians and other Wall Street vendors provide money to the national organizations that educate, convene and influence the public officials responsible for trillions of dollars of retirement assets.
The organizations call it membership, sponsorship, education, partnership and networking.
Wall Street might call it something simpler:
Business development.
And public pension participants should start asking a basic question:
Who is paying the organizations that are educating and influencing the people investing our retirement money?
The issue is not that accepting corporate sponsorship automatically creates corruption. Trade associations routinely have commercial members and sponsors. The more serious problem arises when an organization financially dependent on an industry also becomes an influential voice on issues where that industry’s interests may diverge from pension participants, taxpayers, investigators or regulators.
That is the structural conflict.
NCPERS Says the Quiet Part Out Loud: Sponsors Get Access
The National Conference on Public Employee Retirement Systems may provide the clearest illustration.
NCPERS doesn’t merely say sponsors support pension education.
Its current marketing materials tell prospective sponsors that partnering with NCPERS provides “direct access to leaders and decision makers within the public pension community.”
Benefits include access to trustees, administrators and pension staff, opportunities to develop relationships, conference visibility, exhibits and—in appropriate cases—speaking and panel participation. NCPERS even acknowledges that sponsorship is one of the factors considered when evaluating speaking proposals.
That is remarkably important.
The attached analysis puts the economics in perspective. A manager paying $10,000 or $25,000 for access may be competing for a $500 million mandate. At only 50 basis points, that mandate generates $2.5 million in management fees every year.
The conference sponsorship is rounding error.
The pension mandate is the prize.
This Is a National Ecosystem
NCPERS isn’t alone.
A surprisingly small collection of national organizations sits between Wall Street and many of the trustees, administrators, treasurers and other officials controlling America’s public retirement money.
Organization
Who Wall Street can reach
Financial-industry connection worth examining
NCPERS
Public pension trustees, administrators and staff
Corporate membership, sponsorship, exhibits, networking and potential speaking opportunities
NCTR
Teacher retirement systems
Commercial members include investment managers, consultants and private-market firms
NASRA
State retirement-system administrators and CEOs
Associate and Premium Associate memberships for private-sector firms
NAST
State treasurers
Corporate affiliates receive networking, conference and other access
NASACT
State auditors, comptrollers and treasurers
Corporate Associates Program explicitly facilitates private-sector interaction
SFOF
Primarily conservative state financial officers
Historical financial-industry sponsorship and extensive political-financial networking
NASP
Minority managers, institutional investors and financial professionals
Major managers and pension consultants appear among sponsors
CII
Large institutional investors, including major public pensions
Money-manager associate membership and conference sponsorship
The relationships differ. Membership should not automatically be described as sponsorship, and neither proves that an investment mandate resulted from the relationship.
But taken together, they reveal a national infrastructure through which financial companies can repeatedly interact with the officials controlling public money.
NCTR: Wall Street Inside the Teacher-Retirement Network
The National Council on Teacher Retirement is especially interesting because its pension members include many of America’s largest teacher retirement systems.
Its current commercial-member roster includes BlackRock, Blue Owl, Clearlake Capital, HarbourVest, Adams Street, Bridgewater, Fidelity, Callan, Meketa, Guggenheim, Franklin Templeton and many others.
Commercial membership costs $4,530 in 2026.
Again, $4,530 is virtually meaningless to a large asset manager.
Access to executives and trustees controlling tens or hundreds of billions of dollars isn’t.
This becomes particularly sensitive because public-pension organizations don’t merely organize cocktail receptions. They conduct trustee education, legislative programs, workshops and conferences and help establish what the public-pension community regards as accepted professional practice.
Whose consensus is it?
An industry-supported organization can produce reports, conferences, surveys and policy positions that eventually become accepted as “the position of the public-pension community.” But pension administrators and Wall Street vendors do not necessarily have interests identical to retirees and taxpayers.
NASRA: The People Who Actually Run the Systems
NASRA may be even more strategically valuable.
Its members include retirement-system executives. Its private-sector Associate Members participate through an Associate Advisory Committee that provides insight and guidance on association activities.
Current Premium Associates include BlackRock, Nuveen, PGIM, Principal Asset Management, Lazard, T. Rowe Price and others.
Think about that structure.
The organization represents public retirement administrators.
Private firms seeking business from public retirement systems financially participate in the organization.
Those firms can participate in an advisory committee providing input concerning association activities.
And Premium Associates obtain enhanced access and networking.
None of this demonstrates an improper investment decision.
But it certainly warrants disclosure.
NAST: Treasurers, RFPs and Wall Street
The National Association of State Treasurers provides another unusually clear example.
Its current Corporate Affiliates include KKR, TPG, State Street, Vanguard, Prudential, TIAA, Wells Fargo, UBS and numerous other financial firms.
And NAST explains what Corporate Affiliate membership provides.
Affiliates can submit conference topics and speaker suggestions, serve as speakers or panelists, participate in members-only networking, access member information and even access selected RFPs.
That doesn’t mean NAST is selling investment mandates.
It does mean Wall Street considers proximity to state treasurers sufficiently valuable to pay for participation in the ecosystem surrounding them.
SFOF Shows How the Network Can Become Political
SFOF takes the issue one step further.
The State Financial Officers Foundation brings together conservative state treasurers, auditors and other financial officials. SFOF itself describes its national gatherings as opportunities for discussions between financial officers, the financial industry and political leaders.
Historical sponsor records identify Fidelity and Invesco as Silver sponsors, Wells Fargo as Bronze, JPMorgan as a Friend of SFOF and KKR as a former Friend of SFOF.
That makes SFOF’s anti-ESG campaign particularly interesting.
As discussed in the attached SFOF analysis, SFOF challenged BlackRock over ESG affiliations including UN Principles for Responsible Investment. Yet KKR—the private-equity giant historically connected to SFOF—has itself participated extensively in ESG and sustainability initiatives, including becoming a PRI signatory in 2009.
That creates an obvious fiduciary question.
If ESG affiliation makes a cheap, liquid BlackRock index mandate objectionable, why doesn’t the same standard apply to an expensive, illiquid private-market manager with similar ESG commitments?
The attached analysis identifies the economic distinction: replacing a low-cost, liquid and transparent index mandate with private equity, private credit, infrastructure or real estate can introduce management fees, carried interest, partnership expenses, leverage, illiquidity and manager-controlled valuations.
Follow the money, not the political label.
Ohio STRS Shows Why Access Matters
The Ohio STRS controversy provides a remarkable case study.
Ohio’s attention centered on QED and reform trustees Rudy Fichtenbaum and Wade Steen.
But QED received $0 from STRS.
Meanwhile, STRS had billions invested in private markets.
And one of the central QED figures, Seth Metcalf, had previously been an Ohio deputy treasurer, OPERS trustee and Ohio Deferred Compensation trustee before becoming president of SFOF’s board. Historical records identify KKR among SFOF’s former financial supporters.
Even more interesting, Alaska Permanent Fund travel records discussed in the Ohio analysis show its executive director attending SFOF’s 2017 annual meeting and meeting with KKR during the same trip.
And the SFOF network subsequently supplied another revealing example. The Ohio article describes SFOF connections between state officials and Vivek Ramaswamy, whose Strive later obtained public-pension advisory business.
The pathway matters:
Financial firm → national organization → public financial official → pension access → potential business.
That pathway deserves the same scrutiny we give campaign contributions.
The Real Conflict May Be Over Transparency
The biggest danger isn’t necessarily that a manager buys a mandate.
It may be that industry-funded organizations gradually influence what public pensions consider normal.
Private-market firms generally benefit from broad investment discretion, long-duration partnerships, complex fee structures and confidentiality.
Participants and taxpayers may instead prefer lower costs, maximum transparency, independent valuation and competitive procurement.
Those interests can collide over:
private-equity fees and carried interest;
LP agreements and side letters;
manager selection;
consultant conflicts;
private-asset valuations;
benchmarks;
placement agents;
investigations and forensic audits.
The State Organizations Are the Next Layer Down
There is also a smaller but important state-level network.
Among the organizations worth tracking are MAPERS in Michigan, Missouri MAPERS, MACRS in Massachusetts, SACRS in California, FPPTA in Florida, TEXPERS in Texas and GAPPT in Georgia.
They should be viewed as the second layer of the same ecosystem.
But the national organizations deserve priority because they can connect a Wall Street firm with pension decision-makers across many states through a single relationship.
Don’t Call It Corruption. Call for Disclosure.
Ordinary trade-association sponsorship should not automatically be labeled pay-to-play.
There may be no quid pro quo at all.
But the public-policy concern is remarkably similar to the problem underlying investment-adviser pay-to-play rules:
Can financial firms obtain privileged relationships or access to officials controlling public assets outside the ordinary competitive procurement process?
This is a structural-conflict question rather than an accusation requiring proof of a bribe.
The solution is straightforward.
Every national public-pension organization should annually disclose:
Who paid it. How much they paid. What sponsorship or membership tier they purchased. What conferences they attended. What speaking opportunities they received. What advisory committees they served on. And which public pension systems and officials participated in those events.
Then pension systems should disclose whether those firms subsequently competed for or received investment mandates.
The new 401(k) lawsuit against Ford Motor Company contains a remarkably simple lesson:
A low recordkeeping fee does not necessarily mean low recordkeeper compensation.
According to the complaint in Fuller v. Ford Motor Co., Ford negotiated recordkeeping with Alight for approximately $20 per participant.
That looks excellent.
But plaintiffs allege Alight received millions of dollars of additional compensation through other relationships associated with the plans, including payments connected with Financial Engines’ managed-account services and rollover activity.
Published accounts of the complaint put Alight’s alleged total compensation as high as approximately $57 per participant.
So the apparent $20 recordkeeping fee may have been closer to a $57 economic relationship.
Ford is important.
But Ford is also a mega-plan.
The potentially much bigger story is what happens farther down the 401(k) food chain.
The $100 Million to $1 Billion Plans
There are hundreds—potentially thousands—of mid-sized 401(k) and 403(b) plans where the Form 5500 appears to show remarkably inexpensive recordkeeping.
I have reviewed many plans in the $100 million to $1 billion range where an insurance-company recordkeeper reports compensation that appears to be:
$20 per participant.
$25 per participant.
Under $30 per participant.
Look only at the Form 5500 and the plan can appear extraordinarily well managed.
But that number can be dangerously incomplete.
Insurance-company recordkeepers can occupy several economic positions simultaneously.
The visible recordkeeping fee can therefore be one of the least interesting numbers in the relationship.
Ford Shows the Problem. Insurance Companies Can Supercharge It.
Ford’s alleged economics are relatively easy to understand.
The recordkeeping contract says approximately $20.
Then plaintiffs identify additional payments connected with other services.
Add them together and plaintiffs contend the economic compensation was substantially higher.
With an insurance-company recordkeeper, the economics can be considerably harder to reconstruct.
Consider a hypothetical $500 million plan.
Its Form 5500 shows:
10,000 participants
$250,000 recordkeeping compensation
or:
$25 per participant.
A conventional fee-benchmarking exercise may give that plan an A.
But suppose the same insurance company also has $75 million of participant assets in its general-account fixed annuity or stable-value product.
The insurance company doesn’t necessarily receive an explicit 50-basis-point management fee.
Instead, it invests the $75 million.
Suppose the underlying portfolio earns 5.5%.
Participants receive 3.0%.
The difference is:
250 basis points.
On $75 million:
$1.875 million annually.
That dwarfs the $250,000 visible recordkeeping fee.
The economics potentially become:
Compensation source
Illustrative amount
Reported recordkeeping
$250,000
Insurance spread economics
$1,875,000
Other revenue sharing
Unknown
Managed accounts
Unknown
Proprietary investments
Unknown
Rollover economics
Unknown
Potential economic relationship
$2,125,000+
The Form 5500 says:
$25 per participant.
The broader economics in this simplified illustration are:
$212.50 per participant.
That is an entirely different fiduciary picture.
The Spread Is the Revenue Sharing Nobody Calls Revenue Sharing
Traditional revenue sharing is relatively easy to understand.
A mutual fund charges 75 basis points.
Some portion goes back to the recordkeeper for shareholder servicing or recordkeeping.
Eventually the industry recognized the conflicts created by those arrangements.
Plans migrated toward institutional shares, zero-revenue-sharing funds and CITs.
But insurance-company plans present another potential form of indirect economics.
Spread products.
With a general-account product, the insurer takes participant assets, invests them and promises participants a crediting rate.
The difference between what the insurer earns and what it credits—after considering expenses, reserves, capital costs and other contractual economics—contributes to the insurer’s economics.
That spread is not necessarily reported on the Form 5500 as:
Recordkeeping compensation: $1,875,000.
Yet the insurer may have access to those assets precisely because it has a broader relationship with the retirement plan.
That deserves fiduciary scrutiny.
This Can Make Ford Look Simple
Ford allegedly involves a $20 headline fee plus identifiable additional payments.
The insurance-company model can be more difficult.
Imagine seeing this on the Form 5500:
Recordkeeper compensation: $27 per participant.
Then discovering that the same insurance company has hundreds of millions of dollars in:
general-account fixed annuities;
guaranteed-interest accounts;
separate-account products;
stable-value products;
proprietary funds;
target-date products;
managed accounts; or
affiliated investment vehicles.
The right question isn’t:
Is $27 competitive?
Of course $27 may be competitive.
The right question is:
What is the insurance company making from the entire plan relationship?
The Wrong Benchmark Can Produce the Wrong Answer
This exposes a fundamental weakness in conventional recordkeeping benchmarking.
Suppose a consultant reports:
Plan
Reported RK cost
Comparable Plan A
$45
Comparable Plan B
$39
Comparable Plan C
$34
Your Plan
$27
The committee minutes then say:
“Recordkeeping fees were reviewed and determined to be reasonable.”
That conclusion may be meaningless if nobody examined the recordkeeper’s other economics.
The consultant has benchmarked the visible invoice.
The fiduciary needs to understand the economic relationship.
Those aren’t necessarily the same thing.
Ford Gives Plaintiff Lawyers a Roadmap
The Ford complaint is important because plaintiffs aren’t simply alleging that $20 was excessive.
That would be a difficult argument.
Instead, they are effectively saying:
$20 wasn’t the real number.
That is the concept plaintiff lawyers should apply to mid-sized plans.
A plan showing $25 or $30 per participant shouldn’t automatically be eliminated from an excessive-fee investigation.
It may deserve more investigation, particularly when the recordkeeper is also an insurance company providing investment or spread products.
The first question should be:
Where else does the recordkeeper make money?
Cunningham v. Cornell Changes the Stakes
This becomes particularly important after the Supreme Court’s unanimous decision in Cunningham v. Cornell University.
ERISA §406 prohibits specified transactions involving plans and parties in interest.
Plan service providers can fall within the party-in-interest framework.
Section 408 contains exemptions permitting necessary plan services subject to statutory requirements, including reasonable compensation.
The Supreme Court held that plaintiffs bringing a §406(a) claim do not have to plead facts negating those exemptions.
The exemptions are affirmative defenses.
That doesn’t make ordinary recordkeeping contracts unlawful.
It does make the complete compensation arrangement more important.
If an insurance-company recordkeeper is receiving money or economic benefits through several channels, fiduciaries should understand those channels rather than assuming that a $25 Form 5500 number establishes reasonable compensation.
Don’t Confuse Spread With a Disclosed Fee
There is an important distinction.
An insurance spread isn’t necessarily a conventional fee.
Part of the spread may compensate the insurer for:
credit risk, capital requirements, guarantees, liquidity, administration and other contractual obligations.
That doesn’t make the spread irrelevant.
It means fiduciaries need to understand it.
The proper analysis isn’t necessarily:
“Every basis point of spread is an excessive recordkeeping fee.”
That would be too simplistic.
The better questions are:
How large is the spread?
What risks and services legitimately justify it?
What does a competitive product provide?
Does the recordkeeping relationship influence the selection or retention of the spread product?
Was the insurer selected as an investment provider independently from its role as recordkeeper?
And, particularly after Cunningham:
What transactions are occurring with a party in interest and what exemption permits them?
Those are much harder questions than simply comparing Form 5500 recordkeeping numbers.
A $25 Recordkeeping Fee Should Sometimes Be a Red Flag
For a large insurance-company-recordkept plan, an extraordinarily low disclosed recordkeeping fee should not automatically end the investigation.
Sometimes it should start one.
If competitors need $40 per participant to provide the service and an insurance company apparently does it for $20, the fiduciary should understand why.
Maybe the insurer is simply more efficient.
But maybe the recordkeeping business provides access to profitable investment products.
Maybe there is traditional revenue sharing.
Maybe there are proprietary funds.
Maybe there are managed-account payments.
Maybe there are spread products.
Maybe there are rollover opportunities.
Or maybe there is some combination of all of them.
There is nothing inherently wrong with a provider earning money.
The fiduciary problem begins when the committee doesn’t know how much the provider is earning or where it is coming from.
Plaintiff Lawyers: Don’t Screen These Cases Out
This may have significant implications for how plaintiff firms screen 401(k) cases.
A common screening methodology starts with Form 5500 data.
Plans with high administrative costs receive attention.
Plans showing $20–$30 per participant may get discarded.
That could be exactly backwards for some insurance-company plans.
A $500 million plan reporting $25 per participant while holding $100 million in the recordkeeper’s own insurance products could potentially be far more interesting than a plan transparently paying an independent recordkeeper $50.
The $50 may actually be $50.
The $25 may not really be $25.
Ford May Be the Tip of the Iceberg
Ford deserves attention precisely because it is enormous and sophisticated.
If plaintiffs can allege that even Ford’s $20 recordkeeping price didn’t capture the complete economics, consider what may be happening in the much larger universe of mid-sized plans.
A $200 million or $500 million plan may not have Ford’s purchasing leverage.
It may rely much more heavily on an insurance-company recordkeeper.
The insurer may simultaneously provide recordkeeping, investments, stable value, annuities, managed accounts and rollover services.
And the Form 5500 may still appear to show:
$25 per participant.
That is why the next generation of excessive-recordkeeping litigation shouldn’t begin by sorting Form 5500s from highest fee to lowest fee.
It should begin by asking:
Who is the recordkeeper?
What other products does it provide?
How much plan money is invested with it or its affiliates?
Where does it make its money?
And after Cunningham v. Cornell:
Is the recipient a party in interest, what transactions occurred, and can the defendants establish the applicable exemption?
Ford gives us the headline.
But the potentially much larger litigation opportunity may be buried among hundreds of ordinary $100 million to $1 billion retirement plans whose Form 5500s appear to show some of the lowest recordkeeping fees in America.
The $25 recordkeeping fee may be the number that should make you look harder—not stop looking.
For years, ERISA litigation has increasingly revolved around two magic words:
“Meaningful benchmark.” The phrase sounds like investment science.
Too often, it isn’t. It has become a litigation construct that can distract courts from the investment question that actually matters:
Did the fiduciary prudently evaluate the investment, its risks, its costs, its contracts, its asset allocation and the reasonable alternatives available at the time?
Investment professionals don’t start with a lawyer’s search for a single magical benchmark.
They start by understanding what they actually own.
And that distinction becomes enormously important with target-date funds, annuities, private equity, private credit and increasingly complicated collective investment trusts.
The BlackRock Target-Date Cases Show What Went Wrong
Beginning in 2022, essentially parallel lawsuits challenged employers’ use of BlackRock LifePath Index target-date funds. These were low cost funds. The theory was straightforward: BlackRock’s funds underperformed several competing target-date families.
The problem was that target-date funds aren’t interchangeable. One 2040 fund might have roughly 70% in equities while another has 60%.
One may use active management. Another passive management. One may have substantially greater international exposure. Another may hold more bonds. Their glide paths can be materially different.
Those differences matter enormously because asset allocation can dominate investment results.
Comparing the raw return of Fund A against Fund B therefore doesn’t necessarily tell you whether either investment manager did a good job.
It may primarily tell you that one fund owned more stocks during a bull market. I believe that BlackRock on a fair basis outperformed in general because of lower fees.
Yet that superficial comparison became the centerpiece of numerous BlackRock lawsuits.
And courts repeatedly threw them out. Three early BlackRock cases were dismissed with prejudice, with courts rejecting comparisons based on other TDF suites, the S&P Target Date Index and even Sharpe ratios.
By 2024, a litigation survey counted eight of the original eleven BlackRock cases dismissed, with only one motion to dismiss denied and two then pending. Cisco became an especially revealing example.
Plaintiffs amended their complaint repeatedly attempting to solve the comparator problem. In March 2025, the court dismissed the third amended complaint, ending the case at the district-court level.
That’s an expensive lesson.
A bad benchmark can destroy an otherwise interesting fiduciary investigation.
A Target-Date Fund Isn’t Really One Investment
A target-date fund is better understood as an asset-allocation portfolio wrapped inside a single investment vehicle.
Suppose:
2040 Fund A
70% stocks 30% bonds
and
2040 Fund B
60% stocks 40% bonds
If stocks dramatically outperform bonds, Fund A should outperform Fund B even if Fund B’s underlying managers actually produced superior risk-adjusted investment results.
Calling Fund A’s higher return proof of superior fiduciary prudence is therefore potentially nonsense.
The correct analysis starts by decomposing the portfolio.
What percentage was allocated to equities?
What percentage to fixed income?
What percentage internationally?
What were the underlying exposures?
How did those allocations change?
What risks were being taken?
What did the underlying managers contribute after controlling for those exposures?
Only then can you intelligently discuss performance.
The DOL Has Now Effectively Acknowledged the Problem
This isn’t merely theoretical anymore.
The Department of Labor’s March 2026 proposed investment-fiduciary regulation defines a meaningful benchmark as an investment, strategy, index or comparator having similar:
mandates, strategies, objectives and risks.
Even more importantly, DOL specifically addresses target-date funds.
Its proposal explains that a fiduciary may use a custom composite benchmark blending broad market indexes according to the TDF’s actual asset allocation.
That is much closer to how an investment professional should approach the problem.
In other words:
The benchmark should follow the investment. The investment shouldn’t be squeezed into whatever benchmark makes a lawyer’s complaint work.
Market Timing Disguised as Benchmarking
There is another danger.
Select a comparator after observing which TDF performed best and you may simply be engaging in hindsight market timing.
Imagine stocks outperform bonds for five years.
A lawyer searches the TDF universe and identifies another fund with superior returns.
But suppose that “superior” fund simply maintained a substantially larger equity allocation.
The complaint effectively argues:
The fiduciary should have known five years earlier that stocks were going to outperform bonds and selected the TDF positioned to benefit from that outcome.
That’s not necessarily evidence of imprudence.
It’s hindsight.
The CMFG court identified essentially this problem, rejecting comparisons between BlackRock LifePath and TDF families having materially different investment strategies and management approaches.
Now Add Private Equity
This problem becomes far worse when Wall Street puts private assets inside target-date funds.
A hypothetical 2040 fund might contain:
55% public equities 25% bonds 10% private equity 5% private credit 5% real estate
Now find me the magical index.
There isn’t one.
Private equity doesn’t even produce a continuously observable market price comparable to publicly traded stocks.
Its reported volatility and correlations can be affected by appraisal-based valuations and infrequent marks.
So simply comparing this fund against Vanguard’s or BlackRock’s conventional 2040 fund can become economically misleading.
The DOL’s own 2026 proposal implicitly recognizes this difficulty. For an asset-allocation investment containing private equity, DOL discusses combining public-market indexes with methodologies commonly used for the private-equity component, including IRR and public-market-equivalent analysis.
That is a vastly more sophisticated exercise than:
Fund A returned 8.2%.
Fund B returned 7.6%.
Therefore Fund B was imprudent.
Annuities Expose the Absurdity Even More Clearly
The benchmark obsession becomes especially problematic with fixed annuities.
A general-account fixed annuity isn’t a bond fund. It isn’t a synthetic stable-value fund.
It isn’t a Treasury bill. It is fundamentally an insurance-company contractual promise.
The participant exchanges assets for an obligation of an insurer subject to contractual provisions governing such things as: crediting rates, withdrawals, surrender provisions, market-value adjustments, liquidity, transfer restrictions, investment guidelines, termination rights, and ultimately the insurer’s creditworthiness.
Trying to find a Bloomberg index that magically captures those contractual characteristics misses the investment. As I have argued previously:
Fixed annuities have comparables. They don’t necessarily have benchmarks.
The obvious question isn’t: What index perfectly tracks this contract?
It is: What were comparable insurers willing to pay for reasonably comparable contracts at the same time?
If Insurer A offered 2.25% and equally or more creditworthy Insurer B offered 4.25% on reasonably comparable terms, that’s economically important evidence.
You don’t need to invent an index to recognize it.
Prohibited Transactions Make the Benchmark Distraction Particularly Dangerous
This becomes even more important after Cunningham v. Cornell.
Suppose an affiliated insurer, asset manager, recordkeeper or other party in interest is involved in an investment arrangement.
The first question shouldn’t necessarily be:
Did this product underperform its benchmark?
The questions may instead include:
Who received compensation?
Was the provider a party in interest?
What transaction occurred?
What exemption supposedly permitted it?
Were the exemption’s conditions satisfied?
What did the contract actually say?
What alternatives were available?
What fees were embedded inside the structure?
Those are transaction and fiduciary-process questions.
Performance can matter enormously for damages and prudence.
But a prohibited transaction doesn’t magically become permissible because somebody finds an index that the product happened to outperform.
And Guess Which Products Are Hardest to Benchmark?
There is an uncomfortable pattern.
The products increasingly being pushed into retirement plans are precisely the products that are hardest to evaluate using conventional public-market benchmarks:
Private equity.
Private credit.
Insurance-company general accounts.
Separate-account annuities.
Lifetime-income products.
Private real estate.
Multi-asset CITs containing combinations of them.
That’s not a reason fiduciaries should receive less scrutiny.
It’s a reason they require more sophisticated scrutiny.
The Contract May Be More Important Than Morningstar
An attorney can download performance data in minutes.
Reading a 70-page insurance contract is harder.
Obtaining an LPA is harder.
Understanding a CIT declaration is harder.
Reconstructing embedded fees is harder.
Analyzing surrender provisions is harder.
Evaluating insurer credit risk is harder.
Determining whether investment guidelines actually constrain an insurer is harder.
Calculating asset-allocation-adjusted performance is harder.
And hiring somebody who understands these things costs money.
But ERISA isn’t supposed to become:
Whatever can be downloaded cheaply from Morningstar is actionable; everything requiring investment expertise gets ignored.
That turns litigation economics into fiduciary law.
The Better Plaintiff Playbook
Instead of beginning an ERISA investment case by asking “What benchmark underperformed?”, begin with the investment itself.
Examine underlying holdings and governing documents
Affiliated product
Compare performance
Start with transaction, compensation and exemption
Lifetime income
Compare payout
Examine guarantee, portability, liquidity and downgrade provisions
Fiduciary process
Look at outcome
Examine what fiduciaries actually knew and considered
That is due diligence.
The Irony
Wall Street spent years arguing that retirement investments were too complicated to judge using simplistic comparisons.
On that point, Wall Street was often correct. But that shouldn’t produce the conclusion:
Therefore complicated products cannot be challenged. It should produce exactly the opposite conclusion:
Complicated products require complicated due diligence.
And DOL’s proposed rule makes another important point: when an investment is sufficiently complex, the fiduciary must determine whether it actually possesses the knowledge and experience necessary to evaluate it—or whether qualified investment assistance is required.
That principle should apply to litigation too.
Stop Litigating Investments Like Lawyers. Analyze Them Like Investors.
The lesson of the BlackRock target-date litigation shouldn’t be that ERISA investment cases are dead. The lesson should be that superficial performance lawsuits are bad investment analysis.
A target-date fund isn’t merely its return. An annuity isn’t merely its crediting rate.
Private equity isn’t merely its reported IRR. A CIT isn’t merely its NAV.
And an affiliated financial product isn’t cleansed of a potential prohibited transaction because somebody can produce a favorable performance chart.
The next generation of ERISA cases should move beyond the Wall Street-lawyer obsession with finding one magical “meaningful benchmark.” “the wave of BlackRock LifePath cases overwhelmingly failed, largely demonstrating the danger of comparator-driven pleading.”
Start with: the assets, the allocation, the contract, the fees, the liquidity, the credit risk, the conflicts, the parties in interest, the available alternatives, and the fiduciary’s actual decision-making process.
Then analyze performance. Because sometimes the most misleading benchmark of all is the one that makes a complicated investment look simple.
Appendix: Intel, the Eleventh Circuit and Wall Street’s “Meaningful Benchmark” Catch-22
The misleading-benchmark problem is now squarely before the Supreme Court—and a brand-new Eleventh Circuit decision shows why the Court should be very careful about turning the phrase “meaningful benchmark” into a universal pleading requirement.
In Anderson v. Intel Corporation Investment Policy Committee, the Supreme Court will decide whether an ERISA plaintiff alleging imprudent investment based on underperformance must plead a “meaningful benchmark.”
Intel participants challenged portfolios containing substantial allocations to hedge funds and private equity, alleging high fees, unusual risks and poor performance. The Ninth Circuit nevertheless affirmed dismissal because plaintiffs had not supplied sufficiently comparable benchmarks. The Supreme Court granted review in January 2026.
The Problem: Sometimes the Differences ARE the Case
On August 18, the Eleventh Circuit provided an important counterweight.
In Johnson v. Russell Investments Trust Co., involving Royal Caribbean’s replacement of Vanguard target-date funds with Russell target-date funds, the district court had demanded essentially an apples-to-apples comparator—another TDF with sufficiently similar strategy and risk characteristics.
The Eleventh Circuit rejected making that requirement dispositive.
Its key observation:
“An ERISA plaintiff need not identify an apples-to-apples comparison to establish objective imprudence in every case.”
Why?
Because the plaintiff argued that the very characteristics distinguishing the Russell funds from other TDFs were themselves what made Russell imprudent.
Requiring another investment possessing those same allegedly imprudent characteristics creates a logical trap.
That Is Exactly the Problem With Intel
Consider the Intel allegations. Suppose Intel’s portfolios really were unusual because they contained substantially more:
private equity, hedge funds, illiquid investments, high fees, and other alternative strategies.
Then requiring plaintiffs to locate another retirement portfolio with essentially the same unusual combination of risks and strategies before they can challenge Intel produces an absurd result:
The more unusual the fiduciary’s investment strategy becomes, the harder it becomes to sue the fiduciary because fewer comparable investments exist.
That turns ERISA prudence upside down.
Wall Street’s Benchmark Catch-22
The argument can become:
Step 1: Create an unusual investment.
Step 2: Add private equity, private credit, hedge funds, annuities or other difficult-to-value assets.
Step 3: Give it a bespoke asset allocation.
Step 4: Make conventional comparisons increasingly difficult.
Step 5: When participants sue, demand an investment with essentially identical characteristics.
Step 6: Argue that no “meaningful benchmark” exists.
Step 7: Dismiss the case.
That is not investment analysis.
It is potentially a complexity safe harbor.
But This Doesn’t Mean Any Benchmark Will Do
There is an important distinction.
The Eleventh Circuit isn’t saying that lawyers should be free to compare any target-date fund against any other target-date fund.
That would create the opposite problem.
As the Eleventh Circuit itself previously observed in Pizarro, “target date funds are not all created equal.” A more equity-heavy TDF will tend to outperform a conservative TDF during a strong equity market, while the relative results can reverse during a downturn.
That supports the investment-professional criticism of many TDF lawsuits.
If:
Fund A = 70% equities / 30% bonds
and
Fund B = 60% equities / 40% bonds,
and equities boom, Fund A’s higher return doesn’t prove Fund B was imprudent.
The plaintiff may simply be using hindsight to say:
The fiduciary should have known stocks were going to outperform bonds.
That’s market timing disguised as benchmarking.
Two Very Different Cases
This distinction is crucial:
Case theory
Proper benchmark treatment
“Fund A was imprudent because Fund B returned more.”
Demand a genuinely meaningful comparison
Different TDF asset allocations
Normalize for asset allocation/glide path
Active vs. passive management
Separate allocation effect from manager effect
Private equity underperformed
PME and appropriate economic analysis
Fixed annuity paid too little
Contemporaneous comparable contracts may matter more than an index
Excessive fees
Compare services, economics and market alternatives
Excessive illiquidity
Analyze liquidity itself
Excessive private-assets allocation
Analyze the allocation and risks
Contract contains dangerous restrictions
Read the contract
Conflicted/affiliated transaction
Analyze parties, compensation and applicable exemptions
Strategy is itself allegedly imprudent
An identical comparator may defeat the point
The mistake is turning “meaningful benchmark” from an analytical tool into a legal password.
Sometimes “There Is No Comparable Fund” Is Evidence Worth Investigating
Suppose a fiduciary created a 2040 TDF containing:
50% public equities 20% bonds 10% private equity 10% private credit 5% real estate 5% annuity contracts.
A court could ask:
Where is the identical 2040 fund that proves this was imprudent?
But perhaps there isn’t one.
And that might be precisely why the investment deserves greater scrutiny.
The real questions become:
Why did the fiduciary depart from conventional allocations?
What additional return was expected for the additional risk?
What liquidity was sacrificed?
What fees were added?
How were private assets valued?
What leverage existed underneath the investments?
What did the contracts say?
Were affiliates involved?
What alternatives were considered?
What happened to diversification after looking through the underlying holdings?
Those are investment questions, not simply benchmark questions.
Intel Could Determine Whether Complexity Becomes Its Own Defense
The stakes in Intel therefore extend well beyond one company’s retirement plans.
The Supreme Court essentially has three choices.
It could allow superficial comparisons, encouraging more lawsuits claiming that one TDF was imprudent merely because another TDF with a completely different asset allocation performed better.
That would be bad investment analysis.
At the other extreme, it could impose a rigid apples-to-apples benchmark requirement that makes unusual private-market and alternative-investment strategies increasingly difficult to challenge precisely because nothing sufficiently identical exists.
That could be even worse.
Or the Court could recognize the economically sensible middle ground now highlighted by the Eleventh Circuit:
A meaningful comparator may be necessary when the inference of imprudence depends upon comparative performance. But an identical comparator should not be required when the allegedly imprudent characteristics of the investment themselves are the reason no identical prudent comparator exists.
That distinction matters enormously as Wall Street pushes private equity, private credit, annuities, real estate and other opaque products deeper into 401(k) target-date funds.
Show Me What the Plan Actually Owned
The debate ultimately comes down to two approaches.
Wall Street litigation approach:
Show me your benchmark.
Investment-professional approach:
Show me what the plan actually owned.
Then examine:
asset allocation, fees, contracts, leverage, liquidity, valuation methodology, conflicts, parties in interest, alternatives and fiduciary process.
After understanding those things, determine the appropriate method for evaluating performance.
The Eleventh Circuit’s new decision gets an important part of this right:
Sometimes the characteristics making two investments different are precisely the characteristics the lawsuit should be examining.
That is the issue the Supreme Court should keep front and center in Intel.
Otherwise “meaningful benchmark” risks becoming the ultimate Wall Street Catch-22:
The stranger, more complicated and less transparent the investment, the harder it becomes to find an identical comparator—and therefore the harder it becomes to challenge.
A benchmark should help courts understand an investment.
It should not protect an investment from being understood.
Appendix: The Eleventh Circuit Just Poked a Hole in the “Meaningful Benchmark” Wall
August 20, 2026
Two days after this article was published, the Eleventh Circuit provided an important real-world example of why the judicially created “meaningful benchmark” doctrine has become too rigid.
In Johnson v. Royal Caribbean Cruises Ltd., the Eleventh Circuit reversed summary judgment for Royal Caribbean in litigation challenging its replacement of Vanguard target-date funds with Russell target-date funds. The district court had effectively demanded an “apples-to-apples” comparator sharing the Russell funds’ strategy and risk profile.
The Eleventh Circuit rejected making that an absolute requirement:
“The important point is that the law imposes no mandate that a plaintiff prove objective imprudence through apples-to-apples comparator evidence.”
That is an important sentence. The court held that comparisons can be useful evidence—but they are not the exclusive method of proving imprudence. Depending upon the circumstances, qualitative evidence, quantitative evidence, or a combination of both may establish that an investment fell outside the range of reasonable choices available to a prudent fiduciary.
Royal Caribbean Shows Why Investment Analysis Cannot Be Reduced to One Comparator
The facts illustrate the problem.
According to the Eleventh Circuit’s analysis, the Russell target-date funds had a very small client base, had lost their two largest clients to Vanguard, carried relatively high pricing, and were associated with an arrangement requiring that at least 75% of the plan’s investment offerings be Russell funds. Evidence also indicated inferior risk, return and risk-adjusted-return characteristics. The Russell funds ultimately underperformed the Vanguard funds they replaced, the American Funds that later replaced Russell, and their own composite benchmark.
An investment professional would look at all of that evidence.
Yet the increasingly lawyer-driven “meaningful benchmark” doctrine threatens to turn ERISA prudence into a search for a nearly identical investment product. That is particularly problematic with customized target-date funds, hedge funds, private equity, private credit and other alternative investments—where differences in asset allocation and strategy can always be invoked to argue that the plaintiff’s comparator isn’t sufficiently “meaningful.”
Royal Caribbean pushes back against that trap.
The Timing Could Matter for Anderson v. Intel
The decision arrives just before the Supreme Court considers Anderson v. Intel Corp. Investment Policy Committee, where the Court will address whether an ERISA plaintiff alleging imprudence based on investment performance must plead a “meaningful benchmark.” The Ninth Circuit required such a comparator even though ERISA itself contains no express “meaningful benchmark” pleading requirement.
Royal Caribbean does not decide Anderson. There is also an important procedural distinction: Royal Caribbean reached the Eleventh Circuit after summary judgment, whereas Anderson concerns what a participant must plead before obtaining discovery.
But that distinction may actually highlight the transparency problem.
If courts require participants to identify a nearly identical comparator before discovery, defendants controlling customized funds and opaque alternative investments can potentially use the uniqueness and complexity of those investments as a litigation shield:
The harder an investment is to understand and benchmark, the harder it becomes for participants to obtain the discovery necessary to determine whether it was prudent in the first place.
That would turn opacity into legal protection.
The Eleventh Circuit instead returned to a much more sensible principle: ERISA prudence is a facts-and-circumstances inquiry, not a mechanical benchmark contest.
A Possible Preview of the Supreme Court?
Royal Caribbean therefore strengthens the argument for the Supreme Court to reject a categorical meaningful-benchmark pleading rule in Anderson.
The better rule is not that benchmarks are irrelevant. They are extremely important investment tools. The problem arises when courts transform one comparator into a judicial gatekeeper to discovery.
Participants should be able to point to fees, risk, performance, asset allocation, liquidity, valuation practices, conflicts, industry analysis, fiduciary process and other relevant evidence—and then obtain discovery into what the fiduciaries actually knew and did.
That is especially important as Wall Street pushes increasingly opaque private-market investments into 401(k) plans.
A benchmark should be evidence. It should not be a secrecy shield.
And the Eleventh Circuit has now given the Supreme Court one more reason to say so.
Private equity doesn’t need to censor professors. It has something better: billions in endowment money, billionaire donors, university trustees, business-school influence, proprietary research data—and jobs everyone wants.
You don’t have to control what professors say if you can help control the economic ecosystem in which they say it.
America’s universities have spent decades pouring endowment and pension money into private equity. Then the relationship metastasized.
Private-equity billionaires became: Trustees. Mega-donors. Investment-committee members. Business-school advisers. Sponsors of research centers. Gatekeepers to proprietary data. Employers of the students universities desperately want placed in lucrative jobs.
Nobody has to tell the professor:
Don’t criticize private equity.
The university’s financial structure delivers the message.
Marc Rowan: When the Donor Starts Acting Like the Boss
Apollo CEO Marc Rowan provides an extraordinary case study.
Rowan isn’t merely a Penn alumnus. He gave $50 million to Wharton and chairs Wharton’s Board of Advisors.
Then came the Gaza controversy.
Rowan urged Penn alumni to “close their checkbooks” and became a major force pushing for changes at Penn. Faculty and the AAUP warned that donor pressure was crossing the line into academic freedom and shared governance.
Whatever one’s views about Gaza, Israel, antisemitism or the campus protests, consider the power relationship.
A billionaire threatens the money.
The university listens. That’s not how academic freedom is supposed to work.
And Rowan isn’t simply any billionaire. He runs Apollo, one of the world’s most powerful alternative-investment companies.
Then Professors Took On Apollo
The story became even more extraordinary in 2026.
The AFT and AAUP demanded an SEC investigation of Apollo concerning disclosures about contacts between Jeffrey Epstein and Apollo executives including Rowan and Leon Black.
Rowan wasn’t merely demanding that Penn fight antisemitism. After helping lead the donor revolt that toppled Penn’s president, the Apollo CEO circulated questions asking whether trustees should close academic departments, change faculty qualifications, alter instruction and discipline faculty over viewpoints. Penn’s AAUP chapter called it what private-equity professionals themselves would recognize immediately: a “hostile takeover” of the university’s core operations.
And the takeover attempt came amid an escalating battle over Israel and Gaza. Penn faculty said colleagues criticizing Israeli government policy were subjected to systematic harassment, while administrators restricted Palestine-related teach-ins, protests and educational events. National AAUP specifically warned that criticism of Israel was being conflated with antisemitism.
That’s where Rowan’s private-equity background becomes relevant. Apollo’s CEO wasn’t behaving like an ordinary alumnus writing an angry letter. He was behaving like an activist owner: change management, change governance, examine the workforce, reconsider underperforming departments and impose new operating rules. The problem is that a university isn’t an Apollo portfolio company—and professors aren’t employees of Marc Rowan.
There’s an even stronger national example that would broaden this beyond Rowan. Just this month, the Guardian reported that the University of Minnesota paid historian Raz Segal $250,000 after withdrawing its offer for him to lead its Center for Holocaust and Genocide Studies. Segal had called Israel’s Gaza campaign a “textbook case of genocide.” Public-record emails showed donor pressure, including warnings that pledges and fundraising could disappear if his appointment went ahead. The university settlement did not admit wrongdoing.
Director of the Center for Holocaust and Genocide Studies Center for Jewish Studies, warned a university official that the Jewish Community Relations Council (JCRC) of Minnesota and the Dakotas, a group that claims to represent “the public affairs voice of the Jewish community”, was planning to coordinate a “volley” of donor objections, Marion Rarick, a Republican
The irony is difficult to miss. American academics increasingly find their freedom dependent upon institutions whose donors, trustees and pension systems are deeply intertwined with private capital. At Minnesota, organized donor pressure helped derail the appointment of a Jewish Israeli genocide scholar who criticized Israel’s conduct in Gaza. At the same time, Minnesota teachers themselves supply billions of dollars to the private-market industry through a pension portfolio allocating more than one-fifth of its assets to private markets. The professors supply the capital. Wall Street collects the fees. Donors gain influence. And the professor who says the wrong thing can discover just how fragile academic independence really is.
AAUP says its members’ retirement systems have at least $27.5 billion committed to Apollo.
Read that twice. Professors’ retirement money helps capitalize Apollo.
Apollo collects fees and profits. Those profits help create enormous personal fortunes.
Those fortunes create mega-donors.
Those mega-donors gain extraordinary access to universities.
And then the professors’ own union finds itself asking federal regulators to investigate the company.
Academia isn’t merely under private equity’s thumb.
In many cases, academia is helping finance the thumb.
Look Who Is Sitting in the Boardroom
Rowan isn’t some bizarre exception.
Private-equity and private-capital executives are scattered throughout the governance structure of America’s elite universities.
University
PE/private-capital figure
University role
Financial connection
Penn/Wharton
Marc Rowan
Chair, Wharton Board of Advisors
Apollo
Stanford
José Feliciano
Trustee
Clearlake Capital
Stanford
James Coulter
Trustee
TPG
Columbia
Alisa Amarosa Wood
Trustee
KKR
Columbia
Jonathan Lavine
Former trustee/chair
Bain Capital
NYU
Joseph Landy
Trustee
Warburg Pincus
NYU
Gregorio Napoleone
Trustee
Stirling Square
NYU
Luiz Fraga
Trustee
Gávea
Northwestern
Du Chai
Trustee
Horsley Bridge
Northwestern
J. Landis Martin
Former board chair
Platte River Equity
Harvard
David Rubenstein
Former Corporation member
Carlyle
MIT
Joseph Broshy
Corporation member
Healthcare PE
These aren’t struggling community colleges looking for somebody to write a $50,000 check.
These are institutions that help determine who becomes America’s economists, financiers, regulators, journalists and political leaders.
And this is only a preliminary list.
Private equity didn’t just get a seat at the table.
It increasingly helps populate the table.
The Business Schools Can Look Like PE Farm Teams
University boards are only the beginning.
Northwestern Kellogg has maintained a Private Equity Advisory Council populated by executives associated with Blackstone, Warburg Pincus, Thoma Bravo, Ares, Partners Group, HIG, Riverside and other private-market firms.
Other elite business schools have built similarly intimate relationships with private capital.
There’s an obvious justification.
Students want private-equity jobs.
Schools want their students to get those jobs.
PE firms want access to elite graduates.
Successful graduates become wealthy alumni.
Wealthy alumni become donors.
Donors become trustees.
Trustees help govern universities.
It’s a beautiful circle.
For private equity.
The obvious question is where the counterweight is.
Where is the Private Equity Skeptics Advisory Council?
Where are the institutional seats for people examining whether PE’s fees, leverage, valuations and claimed diversification benefits actually hold up?
Apparently those aren’t quite as useful for MBA placement statistics.
Even the Academic Data Can Come Through the Industry
This problem gets deeper.
Researchers studying Microsoft don’t need Bill Gates to give them Microsoft’s stock price.
Private equity is different.
Its funds are private.
Its underlying companies are private.
Its contracts are private.
Its valuations are largely private.
Its fees can be extraordinarily difficult for outsiders to reconstruct.
Academic researchers therefore often depend upon proprietary databases and cooperation from institutional investors and industry participants.
UNC’s Private Equity Research Consortium, for example, has described itself as a collaboration between academics and industry professionals and historically facilitated researcher access to Burgiss private-equity data.
Important academic PE research has been produced from institutional datasets like these.
That doesn’t make the research wrong.
But academia ought to recognize the obvious problem:
If the industry controls much of the information, the industry possesses enormous power over the research agenda.
Researchers can investigate the data they can obtain.
The secrets stay secret.
Where Were America’s PE Critics?
For years, Jeffrey Hooke at Johns Hopkins seemed remarkably lonely.
Hooke repeatedly challenged private-equity performance claims, enormous fees and institutional investors’ fascination with alternatives.
Oxford’s Ludovic Phalippou became another major critic.
Notice something?
Oxford.
Not Harvard.
Not Wharton.
Not Stanford.
Not Columbia.
Not Chicago.
That doesn’t prove American professors were silenced.
It raises a better question:
Why did an industry controlling trillions of dollars generate so little sustained criticism from the American academic institutions sitting closest to Wall Street?
Only recently has the academic opposition begun getting louder.
Scholars including Jill Fisch Clayton and Elisabeth de Fontenay have challenged the rush to put private equity into ordinary workers’ 401(k)s.
Others are questioning private credit, valuations, fees and the supposed diversification miracle of private assets.
Good.
But where was this skepticism when institutional investors were shoveling trillions into the industry?
Nobody Needs to Bribe the Professor
This is where defenders of the system will deliberately misunderstand the argument.
They’ll say:
“Show me the professor Marc Rowan paid to change a research paper.”
That’s not how sophisticated institutional capture works.
Imagine you’re a 35-year-old finance professor.
Your university endowment has billions in alternatives.
PE billionaires sit on the university board.
PE executives donate enormous sums.
Your business school wants relationships with Apollo, KKR, Blackstone and Carlyle.
Your students desperately want jobs at those firms.
Your research may depend on private-market data.
Your dean wants successful alumni.
And those successful PE alumni may someday write eight-figure checks to the university.
“Private Equity Returns Are Inflated by Leverage, Valuation Smoothing, Bad Benchmarks and Hidden Fees.”
Nobody needs to threaten you.
Nobody needs to buy you.
Nobody needs to censor you.
You can read the room.
Universities Police $25,000 Conflicts While Ignoring $50 Million Ones
This may be academia’s greatest hypocrisy.
Universities obsess over professors’ conflicts.
Take a modest corporate research grant and disclosure rules appear.
Consult for an outside company and forms must be completed.
Own shares in a company you’re researching and everybody properly worries about independence.
But what happens when the conflict moves upstairs?
A billionaire gives $50 million.
His industry manages university assets.
Executives from the industry sit on boards and advisory councils.
The business school cultivates their companies.
The industry’s databases support academic research.
Apparently that isn’t a conflict.
That’s philanthropy.
Private Equity Doesn’t Need to Own the University
It has developed something more efficient.
Private equity can simultaneously be:
The university’s investment manager.
The university’s investment.
The university’s donor.
The university’s trustee.
The business school’s adviser.
The student’s dream employer.
The researcher’s data source.
And increasingly:
A political force demanding changes in university governance.
Every individual relationship can be defended.
Put them together and you get something that starts looking remarkably like institutional capture.
The AAUP-Apollo Fight Exposes the Whole System
That is what makes the AAUP confrontation with Apollo so important.
The organization devoted to defending professors’ academic freedom is challenging a company whose CEO is simultaneously one of America’s most powerful university donors.
Meanwhile, the professors’ own retirement savings help provide billions of dollars of capital to Apollo.
You could hardly design a better illustration of the problem.
Academia didn’t wake up one morning and discover private equity had taken over.
Academia sold it the keys.
First came the endowment investments.
Then the private-equity managers.
Then the billionaire donations.
Then the trustees.
Then the advisory councils.
Then the research relationships.
Then the political influence.
Now universities are discovering something they should have learned long ago:
When somebody supplies enough of the money, eventually they expect a say.
Private equity loves to preach accountability when it buys a company.
Perhaps America’s universities should try some on their own campuses.
Disclose the PE trustees.
Disclose the PE donations.
Disclose the PE managers.
Disclose the research relationships.
Disclose the proprietary-data arrangements.
And most importantly:
Stop pretending a $50 million donor presents less of an academic conflict than a professor with a $25,000 consulting contract.
Private equity didn’t have to buy the Ivory Tower.
Private Equity, NIL and Public Pensions Are Turning College Sports Into the Billionaires’ Fantasy League
For more than a century, college sports had a fairly simple hierarchy.
Alabama was Alabama. Ohio State was Ohio State. Michigan was Michigan.
And Indiana football was Indiana football.
Then college sports discovered something more powerful than tradition:
Money that can buy a roster.
Indiana may be the perfect case study.
Mark Cuban had never been a major Indiana athletics donor. Then Curt Cignetti arrived, started winning, and convinced Cuban that additional money could make a difference.
When Indiana needed more money to land quarterback Fernando Mendoza from Cal, Cuban says athletic director Scott Dolson told him what was needed.
Cuban essentially said:
I’ll put up the money.
Mendoza reportedly went from about $1.6 million at Cal to $2.6 million at Indiana. He won the Heisman Trophy. Indiana went undefeated and won the national championship. Mendoza then became the first pick in the NFL draft.
Cuban subsequently put in more money.
That’s not old-fashioned alumni philanthropy.
That’s something much closer to renting a football team.
You Don’t Have to Own the University
Suppose you’re worth $10 billion.
You can’t buy Indiana University.
You can’t buy Michigan.
You can’t buy Oregon.
But you don’t need to.
If the university and television contracts already pay for the stadium, athletic department, coaches and infrastructure, you only need to provide the marginal dollars that separate an average roster from a championship roster.
That number suddenly looks surprisingly affordable.
A recent survey found the average Power-conference football roster now costs more than $20 million. Miami was reportedly above $40 million, while many schools supplement their revenue-sharing money with another $3 million to $5 million from booster-funded NIL collectives.
For a billionaire, that’s pocket change.
Spend $20 million a year for three years and you’ve spent $60 million.
For someone worth $10 billion, that’s 0.6% of his fortune.
An NFL franchise might cost $8 billion.
A college football fantasy team might cost $20 million a year.
Which sounds like more fun?
Indiana Is Not an Outlier
Look around college sports.
Phil Knight and Oregon.
Larry Ellison and Stephen Ross at Michigan.
Cody Campbell at Texas Tech.
Ryan Smith and the BYU basketball ecosystem.
Tilman Fertitta at Houston.
The Tyson and Jones families at Arkansas.
David Booth at Kansas.
Mat and Justin Ishbia at Michigan State.
Paul Tudor Jones at Virginia.
Anthony Pritzker at UCLA.
David Rubenstein and the private-money ecosystem surrounding Duke.
These aren’t boosters buying everyone a steak dinner after the game.
Some are billionaires whose financial resources rival the annual budgets of the universities themselves.
And the new rules allow that wealth to get much closer to the playing field.
Mark Cuban Accidentally Explained the Whole Thing
Cuban has compared the new college-football environment to an NBA salary cap.
He’s right.
But there’s one enormous difference.
The Dallas Mavericks have an owner.
Indiana University doesn’t.
Theoretically.
Yet if one billionaire supplies enough incremental capital to determine which quarterback Indiana can afford, how many transfer-portal players the coach can recruit and how competitive the roster becomes, we should at least ask:
What does ownership really mean?
Cuban doesn’t hire the coach.
He doesn’t own Indiana Athletics.
He doesn’t tell the quarterback which play to run.
That’s important.
But economic control doesn’t always require legal ownership.
If your money makes possible a roster that otherwise couldn’t be purchased, you’ve acquired something extremely valuable:
influence over competitive outcomes.
College Basketball Is Even Easier to Rent
Football requires dozens of expensive players.
Basketball requires five starters.
Kentucky reportedly spent around $22 million constructing its 2025-26 roster, and reports suggested another $20-million-plus roster could follow.
Think about that.
A billionaire doesn’t need to donate $500 million to build a medical school.
He can spend $20 million on basketball players.
For two years.
Maybe win a championship.
Sit courtside.
Become the most popular alumnus on campus.
And move on.
That looks remarkably like renting a professional franchise—without paying the franchise acquisition price.
Now Private Equity Has Discovered the Other Half of the Business
The billionaires can finance the players.
Private capital can monetize everything surrounding them.
The University of Utah has already crossed the line.
Utah created a for-profit company with Otro Capital that manages revenue-producing activities including events, branding, licensing, sponsorships, ticketing and digital media.
Otro gets a percentage of the resulting revenue.
Utah still owns the facilities and controls coaches, recruiting and athletes.
That’s precisely why the structure is so fascinating.
Otro doesn’t have to own the Utah Utes.
It gets access to the economics surrounding the Utes.
The original transaction contemplated potentially hundreds of millions of dollars of outside capital, with reports putting the broader potential commitment as high as $500 million.
This is the private-equity version of renting the team.
Then the Big 12 Called Wall Street
The Big 12 subsequently approved a five-year partnership with RedBird Capital Partners and Weatherford Capital.
The conference gets a $12.5 million capital infusion and commercial-development assistance.
Individual schools can obtain up to $30 million apiece through an optional credit facility.
Importantly, RedBird doesn’t own the conference, its revenues or its governance.
Again:
Why own the team when contracts can give you access to its economics?
As of May, no Big 12 school had publicly confirmed taking the $30 million credit offer.
That restraint may not last forever.
And Guess Who Else Has Discovered College Sports?
Public money.
Elevate launched a $500 million Collegiate Investment Initiative backed initially by Velocity Capital Management and the Texas Permanent School Fund Corporation.
Its purpose is to provide capital for revenue-generating college athletic projects.
Read that again.
A public institutional investment fund is helping capitalize a platform designed to monetize college athletics.
Meanwhile, the Big Ten considered something even larger.
UC Investments—connected to the University of California retirement and investment system—proposed putting $2.4 billion into a new Big Ten commercial entity in exchange for a 10% interest in Big Ten Enterprises, which would house media-rights and sponsorship economics.
Michigan and USC opposed the transaction and the proposal was paused.
But the significance isn’t whether that particular deal ultimately closes.
The wall has already been breached.
Follow the Circular Money Trail
Here’s where college sports starts looking a lot like the rest of modern finance.
Public/institutional money
↓
Private-equity and investment managers
↓
Billionaire fortunes
↓
College boosters and private-capital vehicles
↓
Players, coaches and athletic departments
↓
Winning
↓
Tickets, television, sponsorships and gambling
↓
More valuable college-sports cash flows
↓
Private investment returns
↓
Back to institutional investors
This isn’t the college-sports business most alumni think they’re watching on Saturday afternoon.
Then Add Gambling
This is where regulators should start paying attention.
College games are no longer merely contests between students representing universities.
They are events surrounded by enormous amounts of legal gambling.
And roster information moves betting markets.
A quarterback transfer matters.
An injury matters.
A player’s compensation dispute matters.
A billionaire deciding whether to finance another transfer matters.
If private investors, billionaire boosters, commercial partners, data companies and sportsbooks increasingly surround the same teams, the question isn’t whether any particular participant is doing something improper.
The question is:
Who is watching the conflicts?
The Public-University Problem
The issue gets stranger when the team belongs to a public university.
The taxpayers effectively own the institution.
Students pay tuition.
Fans buy tickets.
Donors finance facilities.
Television networks finance conferences.
Billionaires finance players.
Private capital can finance commercial operations.
And public investment pools can potentially provide capital to the investors.
Who exactly is the principal?
And who is the agent?
That is a governance structure begging for conflicts.
The Billionaire Fantasy League
Maybe we need to stop pretending this is still traditional amateur college athletics.
College football and basketball are evolving toward something genuinely new:
The Billionaire Fantasy League.
Pick your alma mater.
Hire a great coach.
Put $20 million into the roster.
Buy a quarterback.
Bring in transfers.
See if you can win the championship.
If it works, put in another $20 million next year.
Cuban’s experience is almost a perfect demonstration.
Indiana needed a quarterback.
The athletic director had one in mind.
There was a funding gap.
A billionaire wrote the check.
The quarterback won the Heisman.
Indiana won the national championship.
Cuban put in more money.
That may be the greatest booster return on investment in college-football history.
The Next Great College Rivalry May Be Billionaire vs. Billionaire
Michigan–Ohio State used to be about recruiting, coaching and tradition.
Increasingly it is also about:
Whose alumni have more money? Larry Ellison or Les Wexner?
Whose collective can raise more?
Whose billionaire wants to play?
Whose private-capital partners can generate more revenue?
And whose university is willing to mortgage more of tomorrow’s sports economics to win today?
That last question should concern university trustees.
“We have to do it because everyone else is doing it.”
That’s how arms races work.
Indiana proves that money can rapidly change the competitive hierarchy.
Utah proves private capital can get directly inside the commercial structure of a public university’s athletics operation.
The Big 12 proves conferences will turn to private capital when they can’t keep up with richer competitors.
And the Texas Permanent School Fund and proposed UC/Big Ten transaction show institutional public money can wind up on the investor side of the equation.
College sports isn’t simply being professionalized.
It is being financialized.
The universities may still own the jerseys.
The fans may still sing the fight songs.
But increasingly, somebody else may be financing the players, somebody else financing the athletic department, and somebody else owning a contractual claim on the money those players and fans generate.
Private equity doesn’t have to buy your college football team.
A billionaire can rent the roster.
Wall Street can rent the revenues.
And public money may help finance both sides of the game.
Allison Ball has spent years telling Kentucky taxpayers that ESG creates conflicts for public pension fiduciaries.
Maybe somebody should audit Allison Ball.
Because when you follow the money from Kentucky’s pension funds to KKR, and then from KKR into the State Financial Officers Foundation orbit, the anti-ESG crusade starts looking considerably less principled. KKR is also a major funder of Data Centers.
Ball isn’t some casual SFOF member.
She was SFOF national vice chair in 2018, national chair in 2019, and is now SFOF’s 2026 Auditor at Large. SFOF itself currently lists Ball in that position.
And the relationship became even more personal.
Meet O.J. Oleka: From Allison Ball’s Office to Running SFOF
O.J. Oleka wasn’t merely another Kentucky Republican who happened to end up at SFOF.
He worked for Allison Ball.
Oleka joined Ball’s Kentucky Treasury staff, served as communications director and was promoted to chief of staff and assistant/deputy state treasurer.
Ball explained the promotion by saying Oleka had spent the previous year shaping the message coming from her office and helping develop its policy goals.
SFOF liked him too.
While working in Ball’s Treasury, Oleka was named SFOF’s 2018 State Staffer of the Year.
He later joined SFOF’s board.
Then Oleka ran for Kentucky state treasurer in 2023.
Guess who endorsed him?
Allison Ball.
Oleka lost the Republican primary to Mark Metcalf.
But politics provided another landing spot.
In October 2024, Oleka became CEO of SFOF.
So the organizational family tree isn’t complicated:
And the relationship remains remarkably close. In April 2026, Ball and Oleka appeared together as witnesses before the House Oversight Committee at a hearing on fraud prevention.
You couldn’t invent a better illustration of the revolving door.
Now Add KKR
Here is where this gets interesting.
KKR has been identified as a former “Friends of SFOF” sponsor.
Think about that.
SFOF became one of the loudest organizations in America attacking Wall Street firms for ESG.
Yet KKR—one of the world’s largest private-equity firms—was itself inside SFOF’s sponsorship ecosystem.
And KKR is hardly an anti-ESG firm.
KKR has been a signatory to the UN Principles for Responsible Investment since 2009 and has embraced sustainability programs, climate initiatives, ESG integration and other commitments designed in part to satisfy institutional investors in Europe and blue states.
So apparently ESG wasn’t inherently disqualifying.
It depended on which Wall Street firm was practicing it.
Ball’s Bigger KKR Problem: Kentucky Teachers
Ball’s hypocrisy becomes much harder to explain when you look at her actual fiduciary responsibilities.
As Kentucky state treasurer, Ball sat on the Kentucky Teachers’ Retirement System Board of Trustees.
She wasn’t commenting on pensions from Fox News.
She was a pension fiduciary.
During Ball’s tenure, Teachers approved major new commitments to KKR, including as much as:
$55.5 million to KKR European Fund V in 2018.
Then:
$40 million to KKR Health Care Strategic Growth Fund II in 2020.
That’s as much as $95.5 million of additional KKR commitments during Ball’s tenure.
I have not found evidence that Ball personally made or seconded those investment motions, so let’s not pretend otherwise.
But she was sitting on the governing board.
And KKR’s ESG credentials weren’t secret.
KKR had already been a UN PRI signatory for nearly a decade when Teachers approved the 2018 commitment.
Apparently that wasn’t an ESG emergency.
Then Kentucky’s Attorney General Put KKR’s Teachers Business Into a Lawsuit
This is where the story becomes extraordinary.
In July 2020, Republican Kentucky Attorney General Daniel Cameron revived the massive Kentucky pension litigation against KKR/Prisma, Blackstone and others.
Cameron didn’t limit his allegations to Kentucky Retirement Systems.
He explicitly brought Kentucky Teachers’ Retirement System into his factual case.
Cameron’s complaint identified approximately:
$79 million of KKR investments at Teachers
and
$69 million of Blackstone investments.
That’s $148 million.
The attorney general alleged that KKR/Prisma and Blackstone had sold alternative investments to both Kentucky pension systems and characterized the products as similarly risky and expensive.
Those were allegations, not judicial findings, and KKR and Blackstone denied wrongdoing.
But think about what happened next.
Ball was sitting on the Teachers board.
Kentucky’s own Republican attorney general had just put Teachers’ KKR and Blackstone relationships into a major pension lawsuit.
And Teachers subsequently approved another KKR commitment.
Yet somewhere as Cameron’s litigation progressed, Teachers essentially disappeared from the surviving case.
The later litigation and proposed settlement became a KPPA/KRS affair.
Where did the Teachers claims go?
That deserves an answer.
And Then Ball Discovered the Dangers of ESG
By 2022, Ball had become one of America’s prominent anti-ESG financial officers.
Ball and Cameron demanded information about ESG practices in Kentucky’s public retirement systems.
Ball argued that pension managers must focus on beneficiaries rather than political objectives.
Excellent principle.
Let’s apply it retroactively.
Where was that aggressive fiduciary scrutiny when Teachers was committing money to KKR?
Where was it after Cameron’s own lawsuit put KKR’s relationship with Teachers under a spotlight?
And why did KKR’s membership in the same ESG universe that SFOF would use against BlackRock apparently cause so little concern?
The obvious comparison is devastating.
BlackRock ESG = fiduciary crisis. These are primarily low fee low risk investments
KKR ESG = apparently compatible with tens of millions of dollars of Kentucky Teachers commitments. These are high fee high risk assets with big budgets to give to organizations.
Even more remarkably:
KKR itself was once a sponsor of SFOF.
Did KKR Pay Oleka’s Salary?
We don’t know.
And that distinction matters.
SFOF is a nonprofit organization funded overwhelmingly by contributions. Its 2024 Form 990 reported approximately $2.84 million in contributions out of $2.92 million in total revenue.
Its 2024 return reported about $559,000 in executive compensation.
Oleka didn’t become CEO until late 2024, so the publicly available 2024 Form 990 still principally identifies predecessor Derek Kreifels’s compensation rather than giving us a clean annual Oleka salary figure.
More importantly, SFOF does not publicly disclose every donor.
We know KKR was formerly identified as a SFOF sponsor.
We do not currently have evidence showing that a particular KKR contribution paid a particular dollar of Oleka’s compensation.
That shouldn’t end the inquiry.
It should start it.
Is SFOF Allison Ball’s Political Slush Fund?
“Slush fund” is too strong without evidence that money was diverted or improperly used.
But there is a perfectly legitimate question underneath it:
Has SFOF become a privately financed political infrastructure for elected state financial officers?
Look at the structure.
Private organizations and financial companies fund SFOF.
SFOF provides elected treasurers and auditors with national meetings, policy infrastructure, messaging, networking, media exposure and an organized platform for coordinated campaigns.
Ball rose through SFOF’s leadership while holding statewide office.
Her own senior government aide received an SFOF award while working for her.
That aide later joined SFOF’s board, ran for Ball’s old statewide office with Ball’s endorsement, and ultimately became SFOF’s CEO.
Ball remains an SFOF officer.
And Ball and her former staffer now appear together before Congress—Ball as Kentucky’s elected auditor and Oleka as CEO of the organization in which Ball holds a leadership position.
Maybe everything about that arrangement is perfectly proper.
But taxpayers are entitled to ask:
Who is paying for it?
Follow the Money, Not the ESG Talking Points
The biggest irony is that SFOF says its mission includes protecting taxpayer dollars and responsible financial management.
Fine.
Open the books.
Publish every corporate sponsor and contribution.
Publish sponsorship levels.
Publish payments for conferences attended by elected officials.
Publish travel, lodging and entertainment provided to officials or their staffs.
Publish compensation of senior executives.
Publish communications between sponsors and SFOF officials involving state investments.
And most importantly, disclose whether financial firms sponsoring SFOF were simultaneously seeking or maintaining investment-management business from pension systems overseen by SFOF members.
KKR makes that question impossible to dismiss.
KKR was a SFOF sponsor.
KKR was managing Kentucky pension money.
KKR was being sued by Kentucky’s attorney general over pension investments.
KKR had extensive ESG commitments.
And Allison Ball was simultaneously a Kentucky pension fiduciary and a major SFOF figure.
Yet the political villain somehow became BlackRock.
The $64 Billion Question
This isn’t really an argument about whether ESG is good or bad.
It is about consistency.
If ESG affiliations create an unacceptable fiduciary conflict, apply the standard to KKR.
If UN PRI membership makes BlackRock suspect, apply the standard to KKR.
If financial firms influencing public officials create conflicts, disclose KKR’s SFOF sponsorship.
If pension fiduciaries must put beneficiaries first, explain why Kentucky Teachers continued doing business with KKR while Kentucky’s own attorney general was raising serious allegations concerning KKR’s Kentucky pension business.
And explain why Teachers subsequently disappeared from that litigation.
Allison Ball wants Kentucky taxpayers to believe the big threat to their pensions is ESG.
Maybe Kentucky taxpayers should ask a simpler question:
Who funded the people telling them that—and who got the pension money?
Watkins describes AMVR as essentially a cost-benefit test: compare the incremental cost of active management with the incremental risk-adjusted return produced by that active management. His formulation asks two wonderfully simple questions:
Did active management produce a positive incremental return?
If it did, was that incremental return sufficient to justify the incremental cost?
Watkins calls it persuasive “third grade math.” That simplicity could make AMVR particularly useful in ERISA litigation. Watkins has also presented the concept to the Department of Labor’s ERISA Advisory Council.
But there is a problem.
AMVR works best when the numbers going into it are real.
And an increasing portion of the 401(k) marketplace is moving toward investments where fees, valuations, volatility and even the definition of “return” can become much harder to measure.
The Easy AMVR Case: Active Mutual Fund vs. Index Fund
Take an old-fashioned domestic equity option.
Suppose a plan offers an actively managed large-cap fund such as Fidelity Contrafund when substantially similar market exposure could have been obtained through a low-cost index fund.
That is fertile territory for AMVR.
You have:
Active fund expense minus passive alternative expense
compared with:
Active fund risk-adjusted return minus passive alternative risk-adjusted return
Both investments are SEC-registered securities. Both have observable market prices. Expenses are disclosed. Returns are calculated using essentially the same accounting framework.
If the fiduciary paid substantially more for active management but received no corresponding incremental benefit, AMVR gives plaintiffs and courts an intuitively understandable way of asking:
What did the participants get for the extra money?
That may be a much more useful question than simply arguing that one fund had a higher expense ratio.
But the 401(k) Litigation Market Has Changed
The problem is that the classic high-fee standalone active mutual fund is becoming less important in the largest plans.
Large plans have spent years replacing expensive standalone active mutual funds with institutional shares, index funds, CITs and target-date funds.
Meanwhile, target-date funds have become the center of gravity of the modern 401(k).
That changes the litigation opportunity.
Instead of asking whether Fidelity Contrafund justified its additional expense over an index fund, the increasingly important question may be whether an actively managed target-date strategy justified its additional cost over a passive target-date strategy.
And that may be one of AMVR’s best applications.
Fidelity Active TDF vs. Fidelity Passive TDF
This is potentially a very clean comparison.
Fidelity operates target-date strategies using active management as well as index-oriented strategies.
The active Fidelity Freedom funds can carry meaningful expenses. For example, Fidelity currently reports a 0.68% gross expense ratio for Fidelity Freedom 2055.
That creates a natural AMVR question:
Did participants actually receive enough incremental risk-adjusted return from the active target-date management to compensate them for its incremental cost?
This is much cleaner than comparing completely unrelated target-date managers.
The closer the comparator, the stronger the economic argument.
Same provider.
Same retirement year.
Similar glidepath objective.
Similar participant population.
But different implementation costs.
That is exactly the kind of comparison AMVR was designed to illuminate.
Vanguard Can Be a Comparator — But Be Careful
A Vanguard target-date fund can also provide a low-cost benchmark.
But plaintiffs should not simply compare a Fidelity 2040 fund with a Vanguard 2040 fund and declare the difference to be active-management value.
Target dates do not guarantee identical portfolios.
One 2040 TDF might hold 60% equities while another holds 70%. They may have different international allocations, duration, small-cap exposure and glidepaths.
Those differences matter.
A better AMVR analysis would decompose the TDF.
For example:
Component
Active TDF
Passive Comparator
U.S. equity
Active funds
Comparable U.S. index
International equity
Active funds
International index
Fixed income
Active bonds
Comparable bond index
Real estate
Active exposure
Appropriate public benchmark
Cash/short-term
Active
Comparable index
Then apply AMVR to the economically relevant components.
That avoids turning AMVR into another crude performance-comparison lawsuit.
Then Come Private Equity, Private Credit and Annuities
This is where things get much more difficult.
The new generation of target-date CITs increasingly can contain investments that don’t have the transparency of ordinary SEC mutual funds.
That includes:
private equity;
private credit;
private real estate;
fixed annuities;
lifetime-income contracts; and
other insurance-company products.
The AMVR equation may still look simple.
The inputs aren’t.
Private Equity: What Is the Actual Cost?
Imagine that a target-date CIT reports approximately 200 basis points of private-equity expenses.
But the actual economic drag—including management fees, carried interest, portfolio-company fees, financing expenses, fund-of-funds expenses and other embedded costs—is closer to 600 basis points.
Which number belongs in AMVR?
Obviously, it should be the economic cost.
But a participant, fiduciary—or plaintiff’s attorney—may not have access to the contracts necessary to calculate it.
That is why I have argued that the underlying contracts are becoming one of the most important documents in 401(k) litigation.
Private-market valuations create another AMVR problem.
Public stocks are priced continuously.
Private assets generally aren’t.
Appraisal-based and manager-reported valuations can smooth the return series. That can make private assets appear to have lower volatility and lower correlation with public markets than their true economic exposure would suggest.
If the risk-adjusted-return calculation uses artificially smoothed volatility, AMVR can inadvertently reward the very accounting convention that makes the investment appear safer.
Garbage risk numbers in can produce a beautiful AMVR number out.
Annuities Create an Even Bigger Problem: The Invisible Expense Ratio
Now consider a fixed annuity.
An insurer may say:
Expense ratio: 0.00%.
That doesn’t mean the insurer works for free.
The insurer earns investment returns on its general-account assets and credits participants a lower contractual rate.
The difference—the spread—is part of the economics of the product.
Yet that spread doesn’t appear as a conventional mutual-fund expense ratio.
I have previously discussed this problem with TIAA Traditional. TIAA’s target-date modeling can present the annuity as having no conventional investment fee even though the insurer economically benefits from the spread between its assets and the rate credited to participants.
So imagine running an AMVR comparison using:
Index bond fund: 5 basis points
versus
Fixed annuity: 0 basis points
The annuity wins before the calculation even starts.
But if the insurer is economically retaining, say, 150–300 basis points of spread, the comparison changes dramatically.
The problem isn’t AMVR.
The problem is defining cost honestly.
AMVR May Therefore Become a Discovery Tool
This is where I think Watkins’ concept could become particularly powerful for plaintiff lawyers.
AMVR doesn’t merely provide a damages calculation.
It tells you what documents you need.
To calculate the numerator and denominator properly for a modern TDF, plaintiffs may need:
Cost documents: LPAs, side letters, annuity contracts, investment-management agreements, carried-interest provisions, underlying fund expenses, insurance spread analyses and affiliated compensation.
Comparator documents: investment committee analyses showing what passive or lower-cost alternatives were actually considered.
In other words:
AMVR can become a roadmap for discovery.
The fiduciary should be able to answer the question Watkins’ framework raises:
What additional economic benefit did participants receive for every additional dollar they paid?
If defendants cannot answer because they don’t know the real fees, don’t possess the underlying contracts, or relied upon smoothed private-market volatility, that may be more damaging than an unfavorable AMVR calculation.
CITs Make This Problem More Important
This also helps explain why the industry’s movement away from SEC mutual funds toward CIT structures deserves scrutiny.
Yesterday’s excessive-fee case might have involved:
60-basis-point active mutual fund vs. 5-basis-point index fund.
Tomorrow’s case could involve:
40-basis-point TDF CIT
that contains an investment supposedly charging:
0 basis points
but whose insurer retains a large spread,
plus private equity supposedly costing:
200 basis points
whose true economic cost may be multiples of the disclosed number.
The fund wrapper looks inexpensive.
The underlying economics may be anything but.
AMVR 2.0: Follow the Economic Cost
That suggests an important refinement when applying AMVR to modern 401(k) litigation.
Don’t merely use the disclosed expense ratio.
Use the total economic cost.
That means asking:
AMVR numerator =
disclosed fees
embedded fees
spreads
carried interest
underlying fund expenses
affiliated compensation
material transaction costs
relative to the appropriate passive or lower-cost alternative.
And the denominator must receive the same scrutiny.
Don’t accept artificially low volatility simply because an asset isn’t marked to market every day.
Risk-adjusted returns should account for economically meaningful differences in:
liquidity, leverage, credit risk, valuation smoothing and asset allocation.
Otherwise the calculation risks comparing transparent market-priced securities against opaque contracts whose apparent stability results partly from the absence of market pricing.
The Litigation Question Is Beautifully Simple
AMVR’s greatest contribution may ultimately be the simplicity of the question it forces fiduciaries to answer:
Participants paid more. What did they get for it?
For an active SEC mutual fund, we can usually calculate the answer.
For an active target-date fund, we can still calculate it, although we may need to control carefully for glidepath and asset allocation.
For a target-date CIT containing private equity, private credit and annuities, however, plaintiffs may first have to determine what participants actually paid and what risks they actually assumed.
That isn’t a weakness of AMVR.
It exposes a much larger weakness in today’s 401(k) marketplace.
The more difficult Wall Street makes it to calculate AMVR, the more important the underlying contracts, valuation methods and hidden compensation become.
And that may point toward the next generation of 401(k) litigation.
Appendix: AMVR 401(k) Litigation Matrix — From Cleanest Case to the Opaque Frontier
AMVR gets more complicated as 401(k) investments move from transparent, market-priced SEC mutual funds toward target-date CITs containing private equity, private credit and insurance contracts.
The key distinction is between reported cost and true economic cost, and between reported risk and true economic risk.
Litigation Scenario
Example
AMVR Difficulty
Fee Transparency
Risk/Return Comparability
Best Comparator
Principal Litigation Issue
1. Active domestic equity mutual fund
Fidelity Contrafund vs. comparable index
1 — Very Easy
Excellent
Excellent
Same-style passive index
Did active management earn enough incremental return to justify incremental fees?
2. Same-manager active vs. passive TDF
Fidelity active Freedom 2040 vs. Fidelity index 2040
2 — Easy
Excellent/Good
Very Good
Same-manager passive TDF
Particularly clean AMVR test because manager, target year and general objective can be closely matched.
3. Different-manager TDFs
Fidelity active 2040 vs. Vanguard 2040
3 — Moderate
Good
Moderate
Low-cost TDF adjusted for allocation
Must control for glidepath, equity allocation, international exposure, duration and other differences before attributing results to active management.
4. TDF containing private equity/private credit
New-generation TDF CIT
4 — Difficult
Poor
Poor
Public-market equivalents plus liquidity/leverage adjustments
Disclosed fees may materially understate total economic costs; reported volatility may be artificially reduced by appraisal-based valuations.
5. TDF containing fixed/lifetime-income annuity
TDF CIT with embedded insurer contract
5 — Very Difficult
Very Poor
Poor
Comparable bonds/stable value plus credit and liquidity adjustments
A reported 0% expense ratio can ignore a potentially substantial insurer spread and contractual restrictions.
6. TDF combining PE + private credit + annuity
State-regulated multi-asset TDF CIT
6 — Litigation Frontier
Potentially Very Poor
Potentially Very Poor
Component-by-component reconstruction
AMVR may require discovery of contracts, LPAs, spreads, valuation methodology, leverage, underlying expenses and affiliated compensation before it can even be calculated properly.
You cannot prove that an investment was cheap by hiding its compensation outside the expense ratio, and you cannot prove that it reduced risk by hiding volatility inside appraisal-based valuations.
The Discovery Trap for Defendants
AMVR could therefore create an uncomfortable fork for defendants.
If defendants argue that the sophisticated private-market or insurance investment provided superior value, plaintiffs can ask for the documents necessary to verify that proposition.
Private equity: Produce the LPAs, side letters, carried-interest calculations and underlying expenses.
Private credit: Produce leverage, financing expenses, valuation procedures and affiliated transactions.
Annuities: Produce the actual contract, investment guidelines, credited-rate methodology, termination provisions, insurer portfolio information and spread analysis.
TDF CIT: Produce the trustee agreements, underlying investment contracts, valuation methodology and the investment committee’s analysis comparing the structure against transparent alternatives.
If those documents were never obtained or analyzed by the fiduciary, the case potentially becomes more important than a simple excessive-fee claim.
The question becomes:
How could the fiduciary determine that participants received adequate value for the additional cost and risk if the fiduciary itself never determined what the investment actually cost or how much risk participants were actually assuming?
That is where AMVR potentially moves from a performance metric to a fiduciary-process test.
Appendix: Watkins Takes AMVR One Step Further — If Fiduciaries Can Measure Prudence, Why Aren’t They?
Since this article was published, ERISA attorney and investment fiduciary expert James Watkins has taken the AMVR concept an important step further.
In an August 20 article, Watkins proposes combining AI, AMVR, the Terminal Wealth Breakeven Value Index (TWBVI), and what he calls the “Fiduciary Prudence Trinity”—cost efficiency, risk management and commensurate return—to make fiduciary prudence more measurable and auditable.
That matters.
Watkins is not arguing that AMVR is a new legal safe harbor or that a bad AMVR number automatically proves an ERISA violation. Quite the opposite. He argues that quantitative metrics provide evidence about whether the fiduciary actually investigated the economic tradeoffs it was making. His framework is essentially:
That is remarkably close to what investment professionals should already be doing.
AI Changes the Excuse
Twenty years ago, a fiduciary might plausibly argue that performing hundreds of comparative cost, correlation, risk and return calculations was cumbersome and expensive.
AI and modern computing increasingly destroy that excuse.
A fiduciary committee overseeing billions of dollars should be capable of asking relatively straightforward questions:
What additional cost are participants paying? What additional risk are they taking? What additional economic benefit are they expected to receive? What reasonably available alternative was considered?
Watkins’ AMVR and TWBVI framework provides quantitative tools for answering those questions. As Watkins puts it, the objective is not to substitute a formula for ERISA’s prudence standard, but to make fiduciary judgment subject to disciplined investigation, comparison, measurement and explanation.
And That Brings Us Right Back to Wall Street’s Missing Numbers
There is an irony here.
Just as AI makes sophisticated fiduciary analysis dramatically easier, Wall Street is moving retirement assets toward products in which the inputs needed to perform that analysis can become dramatically harder to obtain.
AMVR works beautifully when we can see:
actual fees;
actual returns;
an economically meaningful comparator;
volatility;
correlations; and
the underlying investments.
But what happens when the investment is private equity, private credit, an insurance-company separate account, a proprietary real-estate vehicle or a complicated target-date CIT containing those products?
The problem stops being computational power.
The problem becomes disclosure.
A computer cannot calculate the economic value of a fee it cannot see. AI cannot independently test a valuation that is not disclosed. AMVR cannot reliably measure incremental value when the manager controls the marks used to manufacture the return and volatility history.
And a fiduciary cannot meaningfully document a prudent comparison if the investment manufacturer refuses to provide the information necessary to perform one.
That Could Become a Litigation Question
Watkins makes perhaps his most important observation near the end of his analysis: where a fiduciary could have investigated a material economic tradeoff but failed to do so, the absence of quantification itself may become evidence that the fiduciary process was inadequate.
That turns the traditional defense on its head.
The question may increasingly become not merely:
“Did the committee discuss the investment?”
but:
“Show us the numbers.”
What were the incremental costs?
What was the expected incremental return?
What additional risks were assumed?
What alternatives were modeled?
What did AMVR—or an economically equivalent analysis—show?
And if the fiduciary could not perform those calculations because the manager would not disclose the necessary information, there is an even simpler question:
Why did an ERISA fiduciary invest participants’ retirement money in a product it could not independently analyze?
AI May Be Wall Street’s Transparency Problem
This is ultimately why AI could become much more important to ERISA litigation than simply making lawyers and investment experts faster.
AI dramatically reduces the cost of examining thousands of Form 5500s, investment disclosures, contracts, benchmarks, fees and performance histories and identifying economic inconsistencies that previously required enormous amounts of manual work.
Watkins’ framework provides the complementary analytical structure: cost, risk and commensurate return, supported by AMVR and TWBVI.
Put the two together and fiduciary prudence becomes increasingly testable.
Which means Wall Street’s next competitive advantage may not be producing better investments.
It may be making sure nobody can obtain the numbers necessary to test them.
That is exactly why transparency itself is becoming an ERISA fiduciary issue.
Ohio removed two trustees over a QED proposal that invested $0. Meanwhile, billions actually flowed to private equity—and the man behind QED headed an organization connecting financial firms with the public officials controlling trillions.
Something has always been backwards about the Ohio STRS scandal.
Economics professor and former national AAUP president Rudy Fichtenbaum and fellow STRS trustee CPA Wade Steen were portrayed as participants in a gigantic scheme involving an obscure startup called QED. Ohio Attorney General Dave Yost ultimately succeeded in having both removed from the STRS board. But start with the money.
How much STRS money was actually invested in QED?
$0.
How much did QED pay Fichtenbaum?
Not $1 has been shown.
How much did QED pay Steen?
Not $1 has been shown.
How much did STRS lose investing in QED?
$0.
QED never got the money. Because they never really existed. Never held $1, never registered as investment manager
Meanwhile, STRS was actually investing billions in private equity and other opaque alternatives, generating enormous fees and expenses while STRS investment employees collected millions in performance bonuses.
Those were precisely the investments, performance numbers, fees and bonuses that the reform trustees were questioning.
The Alleged Investment Mastermind Was Really an Ohio Republican Political-Financial Operator
Now look at Seth Metcalf, one of the principals behind QED.
Metcalf wasn’t a Blackstone or KKR portfolio manager.
His expertise was arguably more useful: Ohio politics, public finance and access to the people controlling public money.
His relationship with Republican Josh Mandel reportedly began when Metcalf managed Mandel’s student-government campaign at Ohio State.
After Mandel became Ohio Treasurer, Metcalf became his Deputy Treasurer and Executive Counsel. This appears to be a Republican factional dispute between Treasurer Mandell vs. AG Yost.
Metcalf’s own State Financial Officers Foundation biography says that in the Treasurer’s office he helped oversee functions involving more than $20 billion of investments, $216 billion of custody assets and $60 billion of annual cash movements. He had also served as a trustee of OPERS and the Ohio Deferred Compensation Plan.
So Metcalf understood something extraordinarily valuable:
How public pension money gets allocated—and who controls the process.
Then Metcalf Became President of SFOF
This is where the QED story gets considerably more interesting.
Metcalf became president of the board of the State Financial Officers Foundation, a national organization connecting Republican state treasurers and other financial officials with private financial interests. And among SFOF’s former financial supporters was one of the world’s largest private-equity firms:
KKR.
Historical sponsor records identify KKR as a former “Friend of SFOF.” Other financial-industry sponsors or supporters included Fidelity, Invesco, Entrust Global, Federated Hermes, JPMorgan and Wells Fargo.
KKR’s SFOF relationship has also been independently documented in research examining the private-equity firm’s political activities.
What was access to Ohio STRS worth?
STRS Was a Private-Equity Gold Mine
QED’s supposed “$65 billion” was hypothetical.
STRS’s private-equity money was real.
STRS has had roughly $10 billion of private-equity NAV and billions more of unfunded commitments, while regularly committing another billion dollars or more to PE funds.
For a KKR, Apollo, Blackstone, Ares or aspiring private-market manager, getting onto STRS’s manager roster can therefore be worth enormous amounts of money over time.
That changes how we should think about Metcalf. Perhaps the valuable asset wasn’t QED’s investment technology. Perhaps the valuable asset was access. Metcalf had been:
Mandel political operative>Ohio Deputy Treasurer>OPERS trustee>Ohio Deferred Compensation trustee>President of SFOF>>QED principal
This was someone who understood the machinery connecting politicians, pension trustees, investment staffs and Wall Street.
KKR Makes the Contrast Remarkable
SFOF’s relationship with KKR deserves particular scrutiny.
KKR financially supported an organization headed by Metcalf whose membership consisted largely of state financial officials.
And there is a revealing example of what happened at SFOF meetings.
Alaska Permanent Fund travel records show its executive director traveled to SFOF’s 2017 annual meeting—and during that same trip met with KKR.
An enormous private-equity manager could participate in the same ecosystem bringing together officials controlling billions of public dollars. Metcalf headed that organization.
And Metcalf himself had already sat on the board of one of America’s largest public pension systems.
Yet Ohio’s great fiduciary scandal somehow became:
Rudy Fichtenbaum talked to Seth Metcalf.
Two Very Different Standards
The contrast is extraordinary.
Metcalf/SFOF model:
Financial companies>SFOF>State treasurers and financial officers>Officials with influence over trillions in public assets
This was considered networking.
But:
Metcalf/QED>Fichtenbaum & Steen>Discussion of an investment concept>$0 invested
became a corruption scandal resulting in the removal of two pension trustees.
And nobody demonstrated that Fichtenbaum or Steen pocketed even $1 from QED.
Now Ask Who Actually Had Something to Lose
Fichtenbaum and Steen weren’t merely discussing QED.
They were part of a reform movement questioning the existing STRS investment establishment.
That meant asking uncomfortable questions about:
Private-equity fees.
Secret contracts.
Investment performance.
Benchmarks.
Staff compensation.
Millions of dollars in bonuses.
Those questions involved real money.
QED did not.
And this distinction becomes particularly important because recent academic research found that STRS’s reported investment return exceeded the return researchers calculated from audited financial information in 19 of 20 years.
Those performance numbers mattered because STRS investment employees received performance bonuses.
So ask the most basic investigative question:
Who actually had a financial interest in stopping the reform trustees?
The professor who received no demonstrated QED payoff?
Or the enormous existing ecosystem of investment managers, consultants and highly compensated investment employees whose fees, contracts, performance and bonuses were being questioned?
The Missing Question: What Could Metcalf Have Done With Influence?
This is the part of the story Ohio investigators apparently never pursued seriously.
Suppose Metcalf had obtained significant influence with a majority bloc on the STRS board.
He wouldn’t necessarily need QED to personally manage $65 billion.
Someone with Metcalf’s background would understand that influence over a pension board overseeing roughly $100 billion could itself be enormously valuable.
STRS staff negotiates and executes investment-manager mandates and fee agreements under authority delegated through the pension’s governance structure.
The system continually needs:
Private-equity managers.
Private-credit managers.
Real-estate managers.
Co-investments.
Joint ventures.
Consultants.
Technology.
Advisers.
And new investment ideas.
Wall Street firms compete ferociously for that business.
An intermediary doesn’t have to personally manage billions to potentially benefit from being able to open doors.
That does not establish that Metcalf intended to do any of those things.
But given his background, it is an obvious question investigators should have asked.
Especially Because SFOF Was Already Selling Access
This isn’t merely theoretical.
SFOF’s corporate model brought financial companies together with state financial officials.
And Metcalf was its board president.
The organization became sufficiently intertwined with financial-industry interests that Campaign for Accountability asked the SEC in 2024 to investigate whether investment-adviser support for SFOF could implicate pay-to-play rules.
Then in May 2026, the same watchdog organization called for Metcalf himself to be removed as SFOF president because of his QED activities.
There is a remarkable irony here.
Ohio’s government successfully removed Fichtenbaum and Steen from STRS.
Yet the politically connected entrepreneur whom the court portrayed as directing them remained president of an organization connecting financial interests with public officials.
Maybe QED Wasn’t the Scandal. Maybe It Was the Weapon.
Nobody needs to believe QED was a good investment idea.
It wasn’t an established investment manager. It had no clients or track record and never received STRS assets. Even critics of the prosecution can readily conclude STRS should never have handed it billions.
But that’s not what happened.
QED got $0.
Meanwhile, STRS’s existing Wall Street managers got billions.
And the trustees raising questions about those billions were removed.
That is why Ohio should reopen the question from the opposite direction.
Don’t start with QED.
Start with the billions actually invested.
Identify every STRS private-equity manager.
Identify every fee.
Identify every no-bid or privately negotiated mandate.
Identify every SFOF sponsor.
Then cross-match them.
KKR is an obvious place to start.
KKR supported SFOF.
Metcalf ran SFOF.
Metcalf understood Ohio pension governance from the inside.
And STRS represents precisely the kind of enormous institutional pool private-equity firms compete to access.
If KKR and other SFOF-connected financial firms also held substantial STRS mandates during this period, that relationship deserves far more scrutiny than an imaginary $65 billion QED investment that never happened.
Metcalf didn’t have to imagine whether SFOF relationships could be monetized in the public-pension business. He could watch it happen. While Metcalf served as SFOF’s board president, the organization elevated fellow Ohio entrepreneur Vivek Ramaswamy as a leading anti-ESG voice. Ramaswamy then launched Strive—the “anti-BlackRock”—and SFOF-connected officials helped open doors to public pension systems. Missouri’s treasurer acknowledged that he was connected to Ramaswamy through SFOF; Strive officials met pension officials through the network; and Strive ultimately won public-pension advisory business. In other words, the SFOF model demonstrated that political-financial relationships could become pension business. Metcalf, a former Ohio deputy treasurer and OPERS trustee, would have understood that lesson better than almost anyone
Appendix: The Lever Already Documented the SFOF–Ramaswamy Public-Pension Pipeline
The Seth Metcalf/QED story becomes more significant when placed beside an earlier investigation by The Lever: “How Dark Money Enabled Vivek Ramaswamy’s Cash Grab.”
The 2023 investigation described essentially the same ecosystem examined in this article: the State Financial Officers Foundation (SFOF) providing financial-industry figures access to Republican state officials controlling enormous pools of public money.
According to The Lever, Ramaswamy and executives at Strive contacted financial officers in at least 12 states—including Ohio—to pitch investment products or advisory services. Every one of those states’ top financial officers was an SFOF member.
SFOF wasn’t merely incidental to Ramaswamy’s rise. The organization gave him its 2022 lifetime achievement award—the same year he launched Strive—and provided opportunities to speak before state financial officials. A researcher from watchdog group Documented told The Lever that SFOF helped legitimize Ramaswamy as an anti-ESG expert while giving Strive:
“behind-closed-door access to its most valued prospective clients: state pension funds.”
That access had potential economic value.
In Texas, an SFOF-member state comptroller provided a Strive executive with what the executive specifically requested: a “warm introduction” to officials overseeing an emerging-manager program. Texas Employees Retirement System subsequently invested $100 million in a Strive fund.
Indiana went further, hiring Strive Advisory under a contract that listed Ramaswamy’s services at $4,000 an hour, capped at $150,000. The arrangement raised an obvious conflict question because Strive’s advisory operation could potentially evaluate asset managers competing with Strive’s own investment-management business.
And The Lever reported that Strive did not register lobbyists in the dozen states where its representatives contacted state financial officials, although ethics experts questioned whether some of those activities should have triggered lobbying-registration requirements.
Now Bring It Back to Ohio STRS
That makes Seth Metcalf’s role at SFOF harder to dismiss as an irrelevant biographical detail.
Metcalf—the QED principal at the center of Ohio’s campaign against STRS reform trustees—later headed an organization that The Lever independently identified as an important conduit between financial businesses and public officials controlling pension assets.
The contrast remains remarkable.
Ohio authorities devoted enormous attention to QED, which received $0 from STRS, while comparatively little attention was paid to the much larger financial ecosystem surrounding SFOF and the investment firms seeking access to public pension assets. The original STRS article documents that STRS was simultaneously committing billions to private equity and other alternatives.
The relevant question therefore isn’t whether SFOF, Metcalf, Ramaswamy or Strive necessarily did anything illegal.
It is a much simpler governance question:
If Ohio was genuinely worried about political influence over STRS investment decisions, why investigate the imaginary $65 billion QED investment while largely ignoring the very real political-financial networks competing for billions of dollars of public pension money?
Source: Julia Rock, “How Dark Money Enabled Vivek Ramaswamy’s Cash Grab,” The Lever, Aug. 28, 2023
Follow the Two Piles of Money
Ohio followed this pile:
QED: $0
It found Rudy Fichtenbaum and Wade Steen.
Now follow the other pile:
Private Equity: Billions
There you find investment managers, secret contracts, fees, consultants, staff bonuses—and potentially some of the same financial networks surrounding the politically connected man at the center of QED and possible connections to Candidate for Governor Ramaswamy
Ohio spent years investigating the professor who questioned the system.
Maybe it’s finally time to investigate the system he was questioning.
The CommonSense 401k Project 