Data & Research July 18, 2013

Fee Disclosures Barely Ripple Participants

Fee disclosure regulations implemented last year have had a negligible effect on workers participating in employee-sponsored retirement plans, a survey found.
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According to a client survey of 416 plan sponsors conducted by BMO Retirement Services, 80% of employers reported that the new rules mandating full disclosure of retirement plan fees and expenses have had little or no impact on their plan participants.

Plan sponsors believe the added regulations did not change participant behavior or their perception of their retirement savings benefit. Only 1% of plan sponsors participating in the survey reported seeing positive or negative changes in participant behavior. Similarly, just 1% of respondents felt an increase in ill will by participants toward either themselves or the plan’s recordkeeper.

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In addition, most plan sponsors believe the increased disclosure has not added to participant confusion. According to the survey, only 15% of plan sponsors see this disclosure as confusing to their participants. In contrast, 46% expressed this concern shortly after last year’s regulatory changes took effect.

When asked when they expect older plan participants to retire, more than one-third (36%) of the plan sponsors surveyed believe Baby Boomers enrolled in their company retirement plans will work past the age of 65. Forty-one percent expect this will have a positive impact on their companies, compared to only 4% who felt the impact would be negative.

The survey also identified key attributes plan sponsors look for when considering adding a retirement solution to their company’s defined contribution plan. Three-quarters (74%) of plan sponsors want solutions that are easy for their plan participants to understand, and more than one-quarter (26%) want solutions that are not too complex to manage as a plan sponsor.

Diversions July 18, 2013

Wall Street’s Moral Compass Still Wavering

All’s not well on Wall Street. A survey of financial services professionals turned up widespread misconduct, acceptance of illegal activities and disregard of client interests.
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But all’s not terrible, either. The survey also showed that financial watchdogs are increasingly trusted, willingness to report is high and awareness of the Securities and Exchange Commission (SEC) Whistleblower Program is exploding.

“Wall Street in Crisis: A Perfect Storm Looming” is the second survey of the U.S. financial services industry by Labaton Sucharow LLP. The independent survey confidentially polled financial professionals on corporate ethics, wrongdoing in the workplace and the role of financial regulators in policing the marketplace.

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The results suggest that the financial services industry faces a serious and growing ethical crisis. The survey uncovered some startling numbers, showing the percentage of respondents who:

  • believe their competitors engaged in illegal or unethical behavior: 52%
  • feel that employees in their own company had engaged in similar misconduct: 24%
  • report observing or having first-hand knowledge of wrong-doing in the workplace: 23%
  • believe that financial services professionals may need to engage in illegal or unethical behavior in order to be successful: 29%
  • feel the industry does not put the interests of clients first: 28%
  • admit they would engage in insider trading if they could get away with it: 24%

Surprisingly, in response to each of these questions, younger professionals on Wall Street were significantly more likely to be aware, accept and engage in illegal or unethical conduct than their more senior colleagues.

“Many in the financial services industry appear to have lost their moral compass, and younger professionals pose the greatest threat to investors,” said Jordan Thomas, partner and chair of the Whistleblower Representation Practice at Labaton Sucharow. “Wall Street needs to take the first step toward recovery and admit that it has a corporate ethics problem, or Main Street should brace itself for more scandals.”   

The survey suggests a big disconnect between what the financial services industry preaches and what it actually does, according to Chris Keller, partner and head of case development at Labaton Sucharow. “Until a culture of integrity and stewardship is established, investors will be at risk,” Keller said.

Labaton Sucharow established the first national practice exclusively dedicated to representing SEC whistleblowers. The survey is available here.

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