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New DOL Fee Disclosure Rule Draws Industry Criticism

Concerned about the costs and questioning whether the rule is necessary, an industry group asked the DOL April 11 to delay the rulemaking process it began last month requiring covered service providers to furnish a 408(b)(2) summary guide.

The coalition, which includes the ICI, ACLI, SPARK, SIFMA and the American Bankers Association, claims that 90 days is not sufficient to gather the necessary information and questions whether there is even a need for the rule. The coalition also pointed out that the rule would increase their costs — which is a bit ironic given the purpose of 408(b)(2).

As the DOL pointed out, there is anecdotal evidence that plan sponsors, especially smaller ones without experienced advisors, have trouble deciphering what the 408(b)(2) disclosures actually mean — with some providers submitting massive, hard-to-understand documents. But the coalition notes in their letter that there has been no factual evidence or data that substantiates the DOL’s claim.

Other industry experts are concerned that a summary sheet listing services and fees will leave out the most important part of the equation: value. As quoted in PlanSponsor, plan advisor Jim Sampson quipped, “Fees are only high in the absence of value.”

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