Even for companies that had full transparency before fee
disclosure regulations, 408(b)(2) and 404(a)(5) still prompted change in their
Genny Sedgwick, principal at
Milliman, said during a panel at the 2013 PLANSPONSOR National Conference that although
her company’s entire book of business already had fee transparency, fee
disclosure regulations spurred more education initiatives. In educating plan
sponsor committees about fee disclosure, the outcome included investment
changes. “There were a lot of changes in the fund menu,” Sedgwick said.
More index funds were also added
to plan menus, she added, anticipating that participants would ask for
lower-cost investments following fee disclosure.
Overall, Sedgwick said Milliman
welcomed fee disclosure because it leveled the playing field by requiring more
transparency across the industry.
Steve Benjamin, mayor of
Columbia, South Carolina, agreed that transparency is a good thing. “We believe
that transparency will certainly lead to lower fees,” he said during the panel.
Benjamin said he and other staff
members are facilitating conversations with mayors across the country to help
people understand their roles as a fiduciary. Benjamin said he wants to make
sure that in the public sector, "we’re encouraging our members to ask the
tough questions, to ask their providers … what types of disclosure do you do
for your private sector clients? We want the same type of service."
In light of the regulations,
clients should ask whether they are getting the outcomes they want in relation
to the fees they are paying, concluded Suzanne Herbst, managing director at
Wells Fargo Institutional Retirement & Trust. Three keys to successful
outcomes in a retirement plan are ensuring employees participate in the plan; that
they are saving enough; and that their portfolios are adequately diversified,