Asset managers that limit employee retirement plan investment choices to proprietary, in-house mutual funds are putting a legal target on their backs, attorneys said.

In the context of a rash of lawsuits by employees against financial services companies alleging breach of fiduciary duty in managing 401(k) plans, asset management companies that populate their retirement plans solely with house funds could face potential class action claims from former or current employees, attorneys said.

Asset management companies with such plans include Waddell & Reed Financial Inc. and MFS Investment Management.

“If only proprietary products are in a plan line up, that does put a target on you,” said Marcia Wagner, an ERISA attorney. “The question is whether it’s a bull’s-eye or not,” she said, adding that key questions for such plans include whether the fund options are a breach of fiduciary duty; are fees reasonable; and are the funds best of class.

“Speaking in general and not about these two plans, the duty of a fiduciary is the highest duty under the law and requires a thorough search and prudent options in 401(k) plans and reasonable fees,” said Jerome Schlichter, a leading attorney in employee class-action claims over excessive fees in 401(k) plans. “It raises questions on whether there has been a process of comparison to prudent choices as opposed to proprietary funds.”

According to a filing with the Securities and Exchange Commission, the Waddell & Reed Financial Inc. 401(k) and Thrift Plan had $201.9 million in assets at the end of last year. Each of the investment choices, including shares of company stock, was labeled as a “party-in-interest investment,” according to the filing. The vast majority of the plan’s assets were in two fund groups: the Ivy Funds, a unit of the company, and the Waddell & Reed Advisors Group of Mutual Funds.

At the end of 2014, the Massachusetts Financial Services Company Pension Plan had $46.8 million in total assets, invested across seven MFS and Massachusetts Investors branded funds, according to a filing with the Department of Labor. The plan has not yet filed for 2015. Like the Waddell & Reed plan, each of those investment options were labeled “party-in-interest” funds.

An MFS spokesman, James Aber, said the company had no comment. A spokesman for Waddell & Reed, Roger Hoadley, said that the company did not charge administrative fees on the plan to its employees.

BIG SETTLEMENTS

Several financial services companies recently have been hit with lawsuits from current or former employees, suing over excessive fees amidst allegations of self-dealing. Companies facing the class-action litigation include American Century Companies Inc., Allianz Global Investors, Pacific Investment Management Co and their parent company Allianz Asset Management.

Others, including Massachusetts Mutual Life Insurance Co and Transamerica Corp. have recently reached multi-million dollar settlements with employees.

“What you’re discovering is fairly similar among a large number of mutual funds companies: They use only proprietary funds as options for employees in retirement plans,” said Carl Engstrom, an attorney at Nichols Kaster, who is involved in several of the class-action lawsuits cited above. “This exact style is at issue in multiple pending lawsuits. We don’t believe those practices are consistent with the plan’s fiduciary obligations.”

Waddell & Reed also has a $174 million pension plan with assets “invested in our Asset Strategy style and … managed by our in-house investment professionals,” according to the company’s annual report. With $7.9 billion in assets in A shares, the Ivy Asset Strategy Fund is one of the company’s biggest funds.

Investing a pension plan in a manager’s proprietary style poses another potential risk for an asset manager, Mr. Engstrom said. “The problem of doing everything in-house as an investment firm is when there are problems, you treat the investments as a parent. You’re rooting it on.”

If there is a change of strategy in the pension plan away from a proprietary style, investors could take it as a signal of a lack in confidence in the fund, he added. “It’s a conflict of interest.”