Reish, Chair of the Financial Services ERISA Practice at Drinker, Biddle & Reath, described how Securian’s fee disclosure and revenue sharing process can assist plan sponsors in fulfilling their ERISA obligations, which include the use of a prudent allocation method.The process is called SA2M, short for Securian Actual Allocation Method.
In their paper, “Fiduciary Issues Related to the
Allocation of Revenue Sharing,” Reish and Ashton point
out that plan sponsors cannot meet their fiduciary obligations under
federal law without detailed knowledge of all fees and revenues
associated with their plans and without considering the impact of
revenue sharing on their participant accounts. The authors say Securian’s
process supports plan sponsors by addressing both sides of the
investment expense equation.
“Securian’s system ensures that the accounts of those who select a particular investment bear the costs associated with that investment,” wrote the authors. “In addition, it ensures that the same accounts receive … a return of their share of the revenue sharing.”