Here's the real story (this time for real). Jerry Schlichter, famed crusader for the "little guy" in the 401(k) world, may soon become the victim of his own success. As he recently admitted to me ("Exclusive Interview: Jerry Schlichter Reveals 3 Ways 401(k) Plan Sponsors Can Avoid a Fiduciary Breach"), the courts have referred to him as a "private attorney general." Apparently, judges have even thanked him for having had "a major impact in bringing fees down across the board for Americans who participate in 401(k) plans."

Who needs the DOL when we have Jerry Schlichter?

As much as I applaud his efforts to take on the big guys and their excessive fees, and as excited as I am to see Schlichter be invited to argue one of his cases before the Supreme Court, I fear, like the fall foliage this time of year, his success may have peaked. With the advent of the DOL's Fee Disclosure Rule, the number of obvious conflict-of-interest laden excessive fee cases should diminish. And we can, in part, thank Jerry for that.

There are some, though, who insist there's still ripe fruit for the picking. (Schlichter himself feels 408(b)2 won't discourage some plan sponsors from self-dealing or from failing to undertake proper due diligence on investments, but he's talking about a different matter than the "some" I'm referring to here.) Those who remain in the camp that excessive fees continue to exist may be right, but the slam-dunk fiduciary breach excessive fee cases Schlichter is most known for are a thing of the past.

Why?

That's where the story of my mutual fund comes in. Indeed, I'm not merely talking about the fund I'm most intimately familiar with, I'm talking about a whole sector of funds, namely, actively managed funds. Here's what I mean. It's easy to prove "excessive fees" between different share classes of the same fund managed by the same people. Dollars to donuts, if Schlichter wins his case in the Supreme Court and then goes on to win the argument that the big fund company, not just the plan sponsor, has a fiduciary liability as a result of the excessive fees generated by different share classes of the same fund, no big fund company will ever place itself in that position again. Say good-bye to share classes with excessive fees.

But, some argue, there are some funds with clearly excessive fees (i.e., expense ratios). Are there? While it's easy to show the existence of excessive fees in the case of passive funds that all have the same portfolio, it's less certain you can make the case for actively managed funds. In the case of actively managed funds, the fee argument morphs into the fee/value argument. Remember, the DOL doesn't hold fiduciaries liable for obtaining the lowest fee, only a reasonable fee based on the value received. And in no case can value ever be defined by pure performance returns because those return comparisons change over time.

 It's quite simple to identify a conflict-of-interest transaction. It's much more difficult to ascertain whether a non-conflicted transaction is "fair" or not, but that's precisely the next realm once the current excessive fee cases make their way through the courts.

Perhaps that's why Jerry Schlichter isn't worried about a slew of excessive fee ambulance chasers following in his footsteps to ruin the retirement industry like they ruined the medical industry.