The Department of Labor (DOL) fee disclosure rules put into effect this summer were intended to make it easier for plan sponsors and participants to understand their fees. However, the ShareBuilder 401k national survey shows many sponsors remain confused and feel unprepared to answer questions from employees.
Some keys findings include:
- The reports go unnoticed by many. The majority (92%) of small-business owners claim to be aware of the new regulation requiring providers to supply fee information, but only 60% recall receiving this document.
- The new reports create more confusion. Of those who did recall receiving the documents, the average time spent reviewing was 16 minutes, and 83% were left with questions about what action to take. Sixty-eight percent said they are not fully prepared to answer employee questions about fees.
- Small-business owners are not ready to switch plans. More than one-third (37%) of respondents hired or plan to hire a consultant to help review options, and 34% have gathered or plan to gather benchmarking data. Few business owners are using this as an opportunity to negotiate their plan with their provider (33%) or to search for a new provider (26%).
- Many are uninformed about what is a fair 401(k) fee percentage. Fees are usually based on a percentage of total plan assets; on average, small-business owners said they think 4% is a fair rate, which is much higher than the average percentage.
The ShareBuilder 401k survey was conducted by Wakefield Research among 500 small-business owners and decisionmakers offering 401(k) plans at companies with 100 employees or less, from August 17 and 27, using an email invitation and online survey.