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Fidelity 529 Plan Lawsuit

Fidelity 529 Plan Excessive Fees

Peiffer Wolf Carr Kane & Conway is investigating Excessive Fees related to Fidelity’s 529 Plan. Our initial investigation has uncovered that Fidelity may have caused investors looking to invest their or their children’s college savings to actually lose money. Furthermore, Fidelity allegedly failed to properly supervise broker’s recommendations for the 529 plan.

If you have invested in Fidelity’s 529 Plan, please contact the attorneys at Peiffer Wolf Carr Kane & Conway for a FREE consultation by filling out a Contact Form or by calling 504-523-2434.

Fidelity 529 Plan Lawsuit | What happened?

“FINRA, a private self-regulatory organization for the financial industry, has been cracking down on brokers for selling funds with excessive fees to those saving in 529 accounts, which can cost investors thousands of dollars over the long term.” (CNBC, December 2020).

529 Plans came under scrutiny in January 2019 after FINRA (Financial Industry Regulatory Authority) launched an initiative “to promote member firms’ compliance with the rules governing share-class recommendations of 529 savings plans and promptly compensate harmed customers.” In the same year, Merrill Lynch, Pierce, Fenner & Smith, Raymond James & Associates, and Raymond James Financial Services were ordered to “pay more than $12 million in restitution to customers for supervisory failures.”

Now, it has surfaced that Fidelity may not have adequately supervised brokers’ 529 plan recommendations. Some customers may have been placed in a certain class of funds which carry higher annual fees and cost more over the long term than other classes of funds.

Therefore, investors allegedly paid excessive fees as a result of unsuitable recommendations and Fidelity didn’t properly supervise broker’s 529 plans recommendations.

Financial advisors (brokers) have a legal obligation and regulatory obligation to recommend only suitable investments that are appropriate for their individual clients. Their broker-dealer (employing brokerage firm) has a legal obligation and regulatory obligation to supervise the financial advisor’s sales practices and dealings with clients. To the extent that any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

According to Think Advisor, in 2019 Fidelity managed “$25 billion in assets in 529 plans sponsored by four states: Arizona, Delaware, Massachusetts and New Hampshire. Nonresidents can invest in any of those state plans, but only Massachusetts and Arizona plans allow residents state tax deductions for contributions.”

Fidelity 529 Plan Lawsuit | Additional information on 529 Plans

The SEC highly recommends that investors review the 529 Plan’s offering circular to understand fees. Other important information from the SEC: 

What is a 529 Plan? 

“A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.”

529 Plans Rules

“Fees and expenses will vary based on the type of 529 plan (education savings plan or prepaid tuition plan), whether it is a broker- or direct-sold plan, the plan itself and the underlying investments.”

529 Plans and Taxes

“Investing in a 529 plan may offer savers special tax benefits. These benefits vary depending on the state and the 529 plan.”

FREE CONSULTATION | Fidelity 529 Plan Lawsuit

Peiffer Wolf Carr Kane & Conway is investigating Excessive Fees related to Fidelity’s 529 Plan. If you have invested in Fidelity’s 529 Plan, please Contact Us for a FREE consultation by filling out a Contact Form or by calling 504-523-2434.


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Attorney Joe Peiffer
Founding Partner