Time flies when you’re having fun (or perhaps when focused on other things) — the 2013 annual requirement for fee disclosure under 408(b)(2) and 404(a)(5) is fast approaching. The law firm of Howley Troxell provides some simple guidance for plan sponsors, including:
• Confirm when the notice was provided in 2012 to ensure the 2013 notice is distributed on a timely basis.
• Coordinate with your TPA on preparation and delivery of the notice.
• Review the notice for compliance with DOL requirements, accuracy and clarity.
• Customize the notice or prepare a cover letter to clarify or supplement it if appropriate.
Now on to the bigger question: Has fee disclosure been a success? According to an informal survey by Chris Carosa of Fiduciary News, 70% of experts say no. While plan sponsors have been more responsive than participants, thus proving the mathematic theory than anything is more than nothing, experts lament that many disclosures have been too long and too hard to decipher — an issue the DOL promises to address soon. And even when a fiduciary knows what the fees are, the question remains whether those fees are reasonable.
But fee disclosure in not an event, it is a process, and there is no doubt that more plan sponsors and participants are aware of the issues and are taking notice, if not action. Change involves a three-step process that starts with awareness, moving on to willingness, followed by action. As more private and public tools become available to help sponsors and participants to understand what they’re paying and whether the fee is reasonable for the services rendered, the system should improve — with better providers and advisors winning more business. It just takes time – we can’t expect a 1-year-old to take on the world, can we?
