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Dalbar Ranks Providers on Fee Disclosure

A new in-depth study conducted by Dalbar ranks providers on their 408(b)(2) compliance efforts. The Boston-based financial services consulting firm teamed up with Research on the study.

Based on the technical requirements of 408(b)(2), Dalbar’s “Transparency Analysis” evaluated and ranked record keepers and others according to five criteria: overall usefulness, cost estimates, description of services, fiduciary status and conflicts of interest.

Top honors for record keepers went to BB&T Retirement and Institutional Services, Great-West Retirement Services, John Hancock Retirement Services, Fidelity Investments and TIAA-CREF Financial Services. In particular, Fidelity’s disclosure stands out as one of the best in overall presentation by, for instance, using language that a typical plan sponsor would understand, according to Dalbar.

Record keepers that expressed estimated costs as an aggregate figure in dollars and showed the bottom line — “the best way to present cost estimates,” Dalbar says — include Principal Financial, TIAA-CREF and Charles Schwab & Co.

In terms of fiduciary disclosure, Merrill Lynch’s disclosure, positioned prominently, makes a clear statement of fiduciary responsibility, Dalbar said. Paychex and Morgan Stanley (Nationwide) received perfect scores for the quality of their fiduciary disclosures.

The DOL’s fee disclosure regulations “opened the door for industry leaders to benefit by providing a more compelling case for doing business with them and for laggards to keep their plan sponsor clients in the dark,” Dalbar notes. “The leaders that present a value proposition [will] make the firm more attractive to advisors who recommend them and to plan sponsors who select them.”