Distinguished by Disclosing – Part II
 

AS A FOLLOW UP to our last article—Distinguished by Disclosing—we want to take another look at fee disclosure from the point of view of the participant. With increasing focus on revenue sharing, fee disclosure and transparency, and the growing number of class action lawsuits, many advisers and plan sponsors are seriously addressing the question: What do we disclose to participants?

The current answer is all direct fees and expenses that impact a participant account.  But, is that enough? Today, many large sponsors are beginning to provide to their plan participants information about expenses and revenue sharing upfront to help  their participants make more informed  investment decisions. As an adviser, and perhaps a fiduciary to the plan, you and your clients will want to seriously consider what should be communicated to participants.

Here are a few helpful steps you may want to consider when helping your clients communicate fees and expense allocation to participants:

1. Set up a meeting with your plan committee and be sure they understand the current issues regarding fee disclosure.
2. If you do not already have it, get a complete account of all plan expenses, both hard dollar fees charged, as well as all investment related expenses so you have an accurate annual total plan cost.
3. Calculate these expenses on a per participant basis. This helps you and the sponsor assess the value of services delivered to the plan on a per participant level.
4. Determine when and how fees and expenses will be communicated to participants:  email, annual letter, on statements , and or reference to/and or distribution of prospectus or other investment materials that detail all expenses that can or do impact a participant account.
5. As with all plan related decisions, document the process.

For more information about TruSource and how we can help you grow your retirement plan business, contact Frank Bruno, Senior Vice President, at 800-274-8798.

TruSource, Trust Outsourcing Partners is a division of Union Bank of California, N.A.

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