408(b)(2) and the plan sponsor

[CLE401kGuy]

Now that we're in the home stretch of creating disclosures - how are others out there assisting plan sponsors with actually using the disclosures?

Are firms simply providing the disclosure and letting the plan sponsors know it's coming and leaving it at that?

Are firms providing additional info outside of the disclosure itself or providing some sort of background on the new regs and the plan sponsors' responsibilities included therein?

Are firms helping the plan sponsor out with reading, reviewing, interpreting disclosures?

Since we are accepting fees (even though in many cases we are a co-fiduciary), those of us providing these disclosures are not impartial and cannot give independent assistance with reviewing the disclosures. I've seen new services cropping up that offer independent review of disclosures, but in many cases that could result in adding another layer of fees.

Is there any type of checklist out there that a plan sponsor can independently use to make his / her review?

Any comments, thoughts or inspiration would be appreciated...

[PFranckowiak]

As you state - another potential layer of fees has been added to plans. I would lable those fees as fees to meet DOL disclosures rules!!!!!!

We have clients getting letters from local CPA's that are now going into the business of fee reviews. Their letters are scare tactics to promote business. They are probably going to use some benchmarking source that others are using.

We are in the position that we need to do some education or our clients will take the disclosures and file them in the shredding pile. They don't wnat more work to do with the plan. (We have disclosed these fees in the past and reviewed with clients but now they need to take more action and better document their decision making process) Many smaller clients have no HR department to help them with this.

We cannot review ourselves, but we need to give them information on what they should do with the material provided or someone else will. We need to prepare them for potential employee questions.

Gettng disclosures from many sources that might duplicate some of the fees is another problem.

Oh well - they have to be out in a couple of weeks - then making sure that the Participant Annual Disclosures include everything. Note the Client is really the one responsible for those - most of our clients are not prepared to handle anything like this.

P

[CLE401kGuy]

As you state - another potential layer of fees has been added to plans. I would lable those fees as fees to meet DOL disclosures rules!!!!!!

We have clients getting letters from local CPA's that are now going into the business of fee reviews. Their letters are scare tactics to promote business. They are probably going to use some benchmarking source that others are using.

We are in the position that we need to do some education or our clients will take the disclosures and file them in the shredding pile. They don't wnat more work to do with the plan. (We have disclosed these fees in the past and reviewed with clients but now they need to take more action and better document their decision making process) Many smaller clients have no HR department to help them with this.

We cannot review ourselves, but we need to give them information on what they should do with the material provided or someone else will. We need to prepare them for potential employee questions.

Gettng disclosures from many sources that might duplicate some of the fees is another problem.

Oh well - they have to be out in a couple of weeks - then making sure that the Participant Annual Disclosures include everything. Note the Client is really the one responsible for those - most of our clients are not prepared to handle anything like this.

P

Thanks for the response - greatly appreciated, I'm feeling the same on all of these points, thanks again!

[austin3515]

I don;t think my clients will read it, personally. Maybe ours (a TPA) they can understand, but "Major Fund Company's" - no shot in you know where. It's incomprehensible even to me, and I have at least an exposure to what the they're talking about.

OK, the $100MM plan will look closely - $3MM south, and forget it. Waste of paper.

The real positive fee affect will of course be that competitors who want to steal your business will be able to use the information, and presumably will provide the same service for less - certainly a realistic possibility considering many over-charge. Or perhaps they'll just "spin" their pricing differently and make it look cheaper (i.e., include higher revenue sharing funds, but lower than the hard-dollar costs).

[chc93]

... Or perhaps they'll just "spin" their pricing differently and make it look cheaper (i.e., include higher revenue sharing funds, but lower than the hard-dollar costs).

This is what we've been hearing lately. In one case, it looks like the broker is not getting paid, but that's because his fee is shifted to another "category" (I really don't understand all of these kinds of fees).

[Lou S.]

... Or perhaps they'll just "spin" their pricing differently and make it look cheaper (i.e., include higher revenue sharing funds, but lower than the hard-dollar costs).

This is what we've been hearing lately. In one case, it looks like the broker is not getting paid, but that's because his fee is shifted to another "category" (I really don't understand all of these kinds of fees).

I think that's the point.

And austin is spot on with his post. The more the expenses can now be "hid" in the exense ratios of the funds, the more it probably will be.

[GMK]

Or perhaps they'll just "spin" their pricing differently and make it look cheaper (i.e., include higher revenue sharing funds, but lower than the hard-dollar costs).

We saw a fair amount of this in our latest RFP. Some of the fund list contortions were impressive, when they tried to get a decent all-in rate and keep rev sharing up there. It didn't get us to change our plan, which already had transparent fees, but it was interesting to see.