The provocative quotes and headlines started four years ago and included:
- “The High Cost of 401(k) Fees: How Much Are You Paying? Hidden Charges Can Rob You of a Comfortable Retirement.”1
- “Are fees draining your 401(k) retirement savings?” 2
The hidden fee crusade culminated with the Department of Labor fee disclosure regulations, which became effective this summer and provided defined contribution plan sponsors and participants with a crisp view of the fees associated with their plans. In the interim, plan sponsors received guidance from an emerging—and now well-established—group of retirement plan specialists with deep expertise in the obligations of plan fiduciaries to their plans and participants.
Less-engaged advisors lost plans and relationships as awareness and expectations increased. Service providers implemented new pricing and features with an eye toward clarity and rationality.
And today’s headlines?
- “Why 401(k) Fee Disclosures May Fall Short” 3
- “‘Plain English’ on 401(k) Fees Often Reads More Like Gibberish” 4
We disagree with these sentiments and it appears many plan sponsors do too. OppenheimerFunds fielded a nationwide survey of 200 retirement plan sponsors in September 2012, shortly after the first service provider and participant disclosures were delivered to sponsors and participants. The goal was to gauge the impact of the fee disclosure regulations and we found that sponsors are largely positive about the information being disclosed. We found that sponsors are largely positive about the information being disclosed. They also perceive more benefits than drawbacks for themselves and their participants. View our September 2012 “Regulatory Serendipity” survey results here.
The plan sponsors surveyed generally appreciate the improved transparency, feel that the disclosures help them better understand fees relative to service and allows them to make more educated decisions about providers. They also believe their participants now feel more educated about their plans, have increased trust in the plan sponsor and understand the purpose of fees better.
Naturally, our survey respondents did identify some concerns, but are generally more positive about fee disclosure than recent headlines suggest. Respondents continue to want—and need—help from experienced retirement plan specialists, which provides a unique opportunity to engage with both sponsor and participants.
In fact, the spotlight cast on retirement savings plans by the fee disclosure regulations has resulted in a heightened level of employee engagement. Nearly 47% of plan sponsors report that their participants have already increased, or expect to increase, their plan contributions. This is an unanticipated, yet very positive outcome from these disclosure efforts.
We call that regulatory serendipity.
View full survey results here.
- Kiplinger, May 2008
- USA Today, August 25, 2009
- ABC News, November 8, 2012
- Smart Money, October 8, 2012
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WEBC.122012
New industry is the only way to pull this country out of our political quagmire. All this bluster of the wealthy creating jobs through their investments into business is bull crap. All the middle class retirement benefits are flowing into Wall Street as well and are not generating jobs. Yes your 401K is nothing more than investments into businesses or mutual funds composed of businesses gone public on Wall Street. That’s why employers no longer offer pensions for retiring employees. Why bank or squarrel away monies for retirees when the employee’s retirement monies can be used now through their investing into the company? After all how else could most of our consumer driven businesses survive or even think about hiring when they haven’t generated an innovqative product appealing or supplying need to the masses, in years? Without the monies continuously flowing in through our investments, how could businesses payout shareholder dividends, executive salaries, executive bonuses and executive stock options. How do you think the wealthy are becoming more wealthy? Did you think it was because your company has had proportionately increased sales? If that were the case we would not have high unempoyment and a declining Gross National Product. We wouldn’t be in the situation we are. It wasn’t a history of wars that helped our economies in the past, it was consumer generated…, job creating…, industry.