Advisor Fee Disclosure: Why Plan Sponsors Could Use Another Set of Eyes

advisor fee disclosure The U.S. Department of Labor’s Employee Benefits Security Administration mandates third-party administrators of financial plans (TPAs) advise plan participants of fees taken from plan assets. The regulations regarding fee transparency were strengthened four years ago, with the intended outcome greater clarity for plan participants on where all of their investment dollars were heading.

Under the final DOL rule established in 2012, the fees charged to individual plan participants as well as the plan as a whole must be furnished by the plan administrator, as well as a variety of data on historical fund financial performance. The final rule also “requires participants and beneficiaries to be provided investment-related information in a form that encourages and facilitates a comparative review among a plan’s investment alternatives.”

The rule changes also have ramifications for plan sponsors/fiduciaries, who are advised to read the fine print on their fee structure. Plan sponsors should be able to answer two basic questions regarding plan fees:

  • Are the fees understandable to you and your plan participants?
  • Have you benchmarked your fees against industry fee averages?

A corporate retirement plan expert can help plan sponsors get to the bottom of their fees. With no standard fee disclosure language for plans, even retirement plan advisors need to read carefully. Furthermore, corporate retirement plan advisor can provide the market data needed to ensure that plan participants aren’t paying too much, relatively speaking, in fees.

The latter point shouldn’t escape notice, for it’s possible that plan sponsors could find themselves under legal scrutiny if fees are alleged to be too high. As the National Association of Plan Advisors notes, a current Minnesota lawsuit charges that plan fiduciaries didn’t conduct proper due diligence on a company’s fee structure, thus resulting in too-high fees for plan participants.

Have questions about fee regulations, benchmarking and transparency? Plexus Financial Services can help. Contact us at 847-307-6222 or via the web at PlexusFs.com.

Disclaimer: Plexus Financial Services does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable; we cannot assure the accuracy or completeness of these materials.

Plexus Financial Services is located at 21805 Field Parkway, Suite 300, Deer Park, Illinois 60010. The company phone number is 847-307-6222.

Securities and advisory services offered through Plexus Financial Services LLC, member FINRA/ SIPC, a registered investment adviser. 

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