Your Retirement Paycheck Was Funding Fidelity’s Profit Machine

When AT&T workers contributed money to their retirement plan, they trusted their employer to manage that money responsibly. What AT&T did instead was allow its recordkeeper, Fidelity Workplace Services, to build a system of layered, hidden fees extracted directly from workers’ investment activity — with AT&T never checking whether any of it was legal or fair.

Fidelity served as AT&T’s plan recordkeeper starting in 2005. That means Fidelity handled everything: enrolling workers, maintaining their accounts, processing their contributions. In exchange, Fidelity charged the plan a flat fee per participant. That part was above board. What followed was not.

In approximately 2012, AT&T amended its contract with Fidelity to give workers access to BrokerageLink, Fidelity’s brokerage account platform. BrokerageLink lets workers invest in mutual funds beyond what the standard plan offers. Every time a worker used BrokerageLink, they paid a brokerage commission — for example, a $75 fee ($75 might not sound like much, but across hundreds of thousands of participants investing repeatedly over years, it adds up to millions stripped from retirement savings) just to buy shares of a fund. And on top of that, the mutual fund companies paid Fidelity a percentage of whatever the worker invested. Workers paid twice. Fidelity collected twice.

The Financial Engines Cut: Fidelity Got Half

In 2014, AT&T brought in Financial Engines Advisors to offer optional investment management services. Workers who opted in paid Financial Engines an asset-based fee to manage their portfolios. What workers did not know was that Financial Engines then turned around and paid Fidelity a substantial portion of that fee just for access to participants’ accounts. According to court documents, in some years Fidelity received approximately half of the total fees that Financial Engines charged participants. Half. The workers thought they were paying one advisor. They were actually funding two companies’ bottom lines.

The total compensation Fidelity collected through these two channels added up to millions of dollars. The court documents confirm it: “Participants have invested billions of dollars in these mutual funds, resulting in millions of dollars in revenue-sharing fees for Fidelity.” Billions of workers’ dollars flowing in. Millions skimmed off the top by Fidelity. AT&T’s own people admitted they never audited whether this arrangement was fair.

What a Stolen Retirement Actually Costs a Human Being

Retirement savings are not an abstraction. They are the product of a lifetime of labor. Every dollar in an AT&T worker’s retirement account represents hours of physical or mental work, years of commitment to a single employer, and a bet made in good faith that the system would protect what they earned. When hidden fees drain those accounts, they do not simply reduce a number on a spreadsheet. They shorten timelines, delay retirements, eliminate options, and force people back into the workforce when their bodies and minds are telling them to stop.

The nature of a defined contribution plan makes this especially brutal. Unlike a traditional pension, where a company guarantees a monthly benefit regardless of market fees, a defined contribution plan like AT&T’s puts the full risk on the worker. If fees eat into returns year after year, the worker absorbs every penny of that loss. There is no corporate safety net. There is no correction mechanism. The money is simply gone. As the court itself noted: “Expenses, such as management or administrative fees, can sometimes significantly reduce the value of an account in a defined-contribution plan.” That word “significantly” is doing a lot of quiet work. It means the difference between retiring at 62 and working until 70.

The workers who brought this case — Robert Bugielski and Chad Simecek — are not faceless litigants. They are former AT&T employees who trusted their employer with decades of retirement contributions and discovered, only through litigation, that their plan fiduciary never once bothered to check whether the fees being extracted from their money were fair. The AT&T executive who admitted the company “really didn’t make an inquiry” about whether Fidelity’s cut of Financial Engines’ fees was reasonable was not describing a small administrative oversight. He was describing a deliberate posture of willful indifference. AT&T looked away — and the workers paid for it.

There is a particular cruelty in the specific structure of this scheme. When a worker invested through BrokerageLink, they paid a brokerage commission themselves — a visible fee. Then, without their knowledge, the mutual fund company paid Fidelity a percentage of everything the worker put in. The worker saw one fee. The invisible fee was the one that compounded silently over years. With Financial Engines, the dynamic was even more corrosive: workers believed they were paying for personalized investment management. They were, in part, subsidizing a deal between Fidelity and Financial Engines that AT&T had set in motion and then refused to supervise. The betrayal was not just financial. It was structural. AT&T designed a system that hid the cost from the people bearing it.

Their Own Words, on the Record

The following passages come directly from the Ninth Circuit Court of Appeals opinion. These are not allegations. These are findings and on-the-record statements that AT&T cannot walk back.

“Participants have invested billions of dollars in these mutual funds, resulting in millions of dollars in revenue-sharing fees for Fidelity.” Ninth Circuit Court of Appeals, Bugielski v. AT&T Services, Inc., Filed August 4, 2023 — describing the BrokerageLink revenue-sharing arrangement

“In some years, Fidelity received approximately half of the total fees that Financial Engines charged participants, resulting in millions of dollars in compensation for Fidelity.” Ninth Circuit Court of Appeals, Bugielski v. AT&T Services, Inc., Filed August 4, 2023 — describing the Financial Engines kickback arrangement

“Another AT&T executive testified that ‘what Financial Engines and Fidelity worked out for fees, was between them,’ while another echoed that sentiment and suggested that AT&T ‘really didn’t make an inquiry about whether [the fee paid by Financial Engines to Fidelity] was a reasonable’ one.” Ninth Circuit Court of Appeals, Bugielski v. AT&T Services, Inc., Filed August 4, 2023 — citing deposition testimony from AT&T executives

“Payments from third parties and among service providers can create conflicts of interest between service providers and their clients, and these payments have been largely hidden from view, thereby preventing fiduciaries from assessing the reasonableness of the costs for plan services.” U.S. Department of Labor, Employee Benefits Security Administration, as quoted by the court — explaining why federal regulators required disclosure of exactly the kind of compensation AT&T failed to monitor

“Disclosure is pointless if the fiduciary has no obligation to consider the disclosed information.” Ninth Circuit Court of Appeals, Bugielski v. AT&T Services, Inc., Filed August 4, 2023 — the court’s direct rebuke of AT&T’s legal theory that it could receive fee disclosures and then simply ignore them

“AT&T admits that the language of § 406(a)(1)(C) is ‘broad’ and, if read literally, encompasses the transaction with Fidelity.” Ninth Circuit Court of Appeals, Bugielski v. AT&T Services, Inc., Filed August 4, 2023 — AT&T’s own concession that federal law literally prohibited what it did

The Number That Says Everything

How This Damages More Than One Retirement Account