Why fiduciary discipline is the next discipline plan sponsors will be judged on.
Most plan sponsors are running the same playbook, and most of them don’t even know it. You pick your vendors, the plan year starts, and until renewal forces your hand twelve months later you don’t check in again in any meaningful way. No measurable standards, no documentation that would hold up if anyone ever bothered to ask.
Meanwhile those vendors miss targets, cut corners, and quietly underperform, and nobody is holding them to anything. That back against the wall feeling at renewal? It isn’t inevitable. It is the result of a system designed to keep you reactive, and the vendors know it.
Here’s what most people miss. You don’t have a vendor problem. You have an accountability problem. The vendors are doing exactly what their contracts let them do, which most of the time is not nearly enough. Fix the structure and you fix the vendor behavior, or you replace the vendor entirely. Either way, you stop being a hostage to your own renewal.
You don’t need a vendor swap. You need a system shift, and the difference has never mattered more than it does right now.
Being a fiduciary under ERISA means monitoring vendors. Not at renewal, not when something blows up. Continuously. We built a framework to grade vendor performance against KPIs every single quarter, and every plan sponsor should be doing some version of this. Real KPIs, real contract SLAs, real grades issued four times a year in writing. That is the duty in practice, not the duty on a poster.
The legal landscape has moved
ERISA fiduciary litigation has crossed from retirement plans into health plans. The Lewandowski v. Johnson & Johnson case made headlines, alongside the Wells Fargo and JPMorgan complaints. Some of these cases have been dismissed at the motion to dismiss stage on a question of standing, and that looks like a win for plan sponsors. It isn’t.
When a court tosses a case on standing, it isn’t saying the plan sponsor did nothing wrong. It is saying the specific plaintiff didn’t show enough personal harm to be heard. The fiduciary duty question stays wide open, and the plaintiffs’ bar is reading these dismissals carefully and rewriting their complaints. Stern v. JPMorgan already cleared the bar that Lewandowski and Wells Fargo could not. The wave is far from over. It is loading up for round two.
If you’re reading those dismissals as a green light, you are reading them wrong.
Why your broker probably won’t fix this
Most plan sponsors hand this off to their broker and call it handled. Sometimes that works, more often it doesn’t, and the reason is structural rather than personal.
Follow the money. A commission paid broker gets paid more when the plan costs more, and their paycheck is tied to renewal rather than to whether your vendors are actually performing year round. I’m not throwing brokers under the bus, I’m telling you how the model works. You cannot ask someone to hold a vendor accountable when their paycheck depends on the vendor staying in place.
This is one of the quiet reasons the Consolidated Appropriations Act of 2021 has been such a turning point. Direct and indirect compensation disclosure under section 408(b)(2), the gag clause prohibition, RxDC reporting, the Mental Health Parity NQTL analysis. This is not compliance theater. This is the federal government telling you, in writing, that the duty to monitor vendors is real, that the information you need to do it is yours by law, and that you need to start asking for it.
What fiduciary vendor management actually looks like
Here is what changes when you decide to take vendor accountability seriously.
You stop relying on the annual renewal as your only check in. Renewal is your moment of weakest leverage, not your moment of strongest oversight.
You define what good looks like before the contract is signed, not after. Five to eight measurable KPIs per vendor, tied to participant outcomes wherever possible, time stamped and written into the contract as performance standards with real remedies attached. “Best efforts” is not a standard, it is a wish.
You meet quarterly with a committee that has a real charter, you walk every vendor against the scorecard, and you document every decision in the minutes. Because if it isn’t in the minutes, it didn’t happen. Process matters more than outcome when a regulator or a court is reconstructing what you did and why.
You read the termination clauses before they apply to you, not after. Vendors hide their leverage in the parts of the contract nobody reads until it is too late: cure periods that reset every time, termination fees designed to make leaving cost prohibitive, data hostage clauses that hold your claims data until well after you’ve missed open enrollment. These are not edge cases. This is the standard playbook.
And you treat vendor summits, structured experience calls, reference checks, and active litigation reviews as ongoing discipline, not as boxes you check during procurement and forget about.
Where this goes
The next five years of this industry will not be defined by which vendors innovate the most. They will be defined by which plan sponsors finally learn to govern. The ones who treat vendor accountability as a recurring fiduciary practice instead of an annual scramble are the ones who will defend their plans, their participants, and themselves when the litigation environment catches up to where it is already headed.
The good news? None of this requires you to be a lawyer, a consultant, or a benefits expert. It requires a system. The duty has always been yours, and the structure to discharge it is finally available. The plan sponsors who pick it up now will look back in a few years and wonder how the industry ever ran any other way.
