So, what are some early anecdotal results of the 408(b)(2) requirements among plan fiduciaries? That depends on whether the fiduciary is diligent or not, according to new research by the law firm Bryan Cave. Overall, very few plan sponsors were able to determine on their own whether their fees were reasonable, with some relying on conflicting advice from their service providers — including whether the service was necessary at all. Most indicated that that the disclosures were too complex to understand; as a result, not many of them made changes.
But diligent fiduciaries relying on experienced third-party advice had a different experience. Their advisors were able to:
• confirm that the plans’ providers either complied or identified problems;
• determine whether the fees charged were reasonable — some through benchmarking; and
• initiate an RFP or RFI process.
There’s no doubt that most of us are tired of hearing about 408(b)(2) — but imagine how your clients and prospects feel. The Bryan Cave post is a good way to make sure that advisors are following good practices. It also provides a means to get in the door to speak with plan sponsors who may not be getting proper advice from an independent third party.
