Putnam Enhances Disclosures to Plan Participants

Putnam Investments is introducing a module on its plan participant Web site that it says will offer transparent and comprehensive disclosure of fees and expenses.  

Putnam wants to “demystify” fees and “make them accessible” to retirement plan participants, Edmund F. Murphy, III, Managing Director, Head of Defined Contribution, told PLANADVISER. “We believe this is a step in the right direction.”

The increased disclosures will be available to plan participants online through Putnam’s participant Web site beginning next week. Murphy said the company intends to make the disclosures on participant statements as well, but did not have an expected date for implementation.

The Web site additions are not just a list of fees, Murphy noted, it will show the services rendered for those fees so participants can make an informed judgment. The new disclosures will provide participants with full access to real-time information that will enable them to determine their own individual costs. The plan participants will have to make the calculations to determine what they are being charged, but the information is more readily accessible than it was previously.

The disclosures will address all major types of costs related to Putnam-administered retirement plans, including:

  • the expense ratio associated with each investment option in the plan, converted into an actual dollar value per $1,000 invested
  • a list of transactions which participants might make, such as loans, and the transaction fee associated with each
  • any fees related to services that employees might incur based on how they use their plan, such as fees for managed accounts or online advice.

If there are any third-party fees associated with the plan, including advisory fees, Murphy said Putnam will look to represent those on the site as well. The disclosures will also list the services that participants have access to through their plan.

The fee disclosure module is located in a tab on the Web site called History and Statements. When a participant accesses the module for the first time, a video tutorial appears. The approximately two minute video addresses a number of topics including: assessing plan value; the employer’s fiduciary responsibilities as they relate to the value and fees of their plan; and the different types of fees that participants typically incur and an explanation of what each charge is for.  Murphy also said the video addresses recordkeeping offsets, explaining to the participants that there can be explicit fees or that the costs of recordkeeping can be offset by investment fees.

Murphy said the introduction of the disclosures for participants builds on a Putnam initiative to increase transparency to plan sponsors.  In May, Putnam announced new disclosures for its plan sponsor clients  (see “Putnam Gives Plan Sponsors Enhanced Fee Transparency” ).