For years, Morningstar has positioned itself as the independent umpire of the mutual fund world.
The star ratings. The analyst reports. The fiduciary consulting.
If Morningstar approves it, fiduciaries feel safe.
But buried in Morningstar’s own SEC filings is something most plan sponsors, consultants, and courts do not realize:
Morningstar is deeply embedded in the business of helping insurance companies design retirement plan investment menus built around CITs, annuities, and proprietary insurance wrappers — the very structures now raising ERISA prohibited transaction concerns.
This isn’t speculation. It’s in their Form ADV.
Morningstar Retirement: Not What People Think
Morningstar Investment Management’s “Retirement” division does not simply analyze mutual funds.
They explicitly say they: “construct custom model portfolios for employer-sponsored retirement plans using the investment options available in a plan’s lineup.”
That sounds harmless — until you read the next sentence: “The universe of underlying holdings is generally defined by the Institutional Client and can include investment products that are affiliated with that Institutional Client.”
Translation: If Lincoln, MetLife, TIAA, Principal, Empower, or an insurance platform defines the menu, Morningstar builds portfolios using those proprietary insurance products.
They are not evaluating an open market of mutual funds. They are working inside insurer-defined universes.
The MetLife Smoking Gun
Morningstar has a dedicated ADV brochure for: “Advisory Services to MetLife ExpertSelect Program”
In this document, Morningstar openly states:
“We selected the menu of investment options available in the MetLife ExpertSelect Program from the universe of investments that MetLife is authorized to offer.”
They go further: “We do not review the annuity products in connection with the Program.”
Read that again. Morningstar — the supposed fiduciary expert — builds the menu but does not review the annuity products.
They also state: “The lineups we build are limited to a universe of mutual funds and other investment vehicles, such as CITs and guaranteed retirement income products such as annuities.”
So Morningstar’s job here is: Make insurance menus look like diversified retirement lineups.
The Target Date Angle Nobody Talks About
Morningstar also offers:
“Personal Target Date Fund Services” “Custom Model Portfolios” “3(21) and 3(38) fiduciary services”
But those services are constrained to: “the investment options available in the plan lineup.”
And those lineups, in insurance platforms, are:
- CITs
- Stable value
- Separate accounts
- Annuity sleeves
- Proprietary trust wrappers
This is exactly the structure now showing up in TIAA, Lincoln, MetLife, and other insurance-based target date designs where:
The participant thinks they are in mutual funds, But they are inside insurance contracts.
Morningstar is often the firm paid to “monitor” and “approve” these lineups.
And Morningstar Gets Paid Very Well For This
Their fee schedules show:
- 2–15 basis points for institutional asset management
- 3–8 bps for fiduciary services
- Minimums of $100,000 to $450,000
- Special target-date and managed account fees
This is a huge revenue business tied directly to insurer retirement platforms.
They even disclose: “We receive direct or indirect cash payments from unaffiliated third parties for referring their services to other advisory firms or investors.”
And: “We provide compensation to Institutional Clients to provide marketing or educational support…”
This is not a passive ratings agency. This is an active participant in the insurance retirement ecosystem.
Why Their Articles Read the Way They Do
When Morningstar writes articles like:
- “The hidden trend changing 401(k) plans”
- “Target date fund trends”
They present the rise of CITs and insurance-based structures as innovation.
They never mention:
- Prohibited transaction risk
- Party-in-interest issues
- Share class access problems
- Insurance wrapper conflicts
- Hidden spread compensation
- Fiduciary benchmarking problems
Because this is the ecosystem they are paid to support.
https://www.morningstar.com/funds/hidden-trend-is-changing-401k-plans-heres-what-it-means-investors
https://401kspecialistmag.com/target-date-fund-trends-morningstar/
The Fiduciary Illusion
Plan sponsors believe:
“Morningstar is monitoring our funds.”
What Morningstar is actually doing in many insurance platforms is:
Monitoring the funds inside the insurance cage.
They are not asking:
Why are we in the cage at all?
The Real Question Fiduciaries Should Ask
When Morningstar is hired in a Lincoln, MetLife, TIAA, or similar platform, the right question is:
Are they acting as an independent fiduciary reviewer?
Or Are they being paid to make an insurance menu look prudent?
Because their own ADV says the latter.
The Bottom Line
Morningstar is no longer just the referee of the mutual fund world.
They are now a key architect of insurance-based retirement plan menus where:
- CITs replace mutual funds
- Annuities hide inside target dates
- Proprietary wrappers block institutional pricing
- Fiduciary conflicts multiply
And they disclose it all — if you read the fine print.
Most fiduciaries never do.
The CommonSense 401k Project 