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PRESENTATION SUMMARY

PRESENTATION SUMMARY. Fee Disclosure Requirements Examining Disclosure Documents Evaluating “Reasonableness” of Fees Assessing Value Maximizing your Company’s Plan. PURPOSE. Provide Information the Plan Needs to: Assess reasonableness of compensation

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PRESENTATION SUMMARY

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  1. PRESENTATION SUMMARY • Fee Disclosure Requirements • Examining Disclosure Documents • Evaluating “Reasonableness” of Fees • Assessing Value • Maximizing your Company’s Plan

  2. PURPOSE Provide Information the Plan Needs to: • Assess reasonableness of compensation • Identify potential conflicts of interest • Satisfy reporting and disclosure requirements

  3. REQUIREMENTS

  4. HIDDEN FEES

  5. COMPENSATION DISCLOSURE • Direct Compensation • Indirect Compensation from source other than the plan such as 12b-1 fees, soft dollar arrangements or finders fees • Fees the service provider pays affiliates or subcontractors • Termination fees

  6. DISCLOSURE SAMPLE

  7. DISCLOSURE SAMPLE

  8. DISCLOSURE SAMPLE

  9. DISCLOSURE SAMPLE

  10. DESIRED OUTCOME VS. REALITY

  11. FROM DOL.GOV • EBSA estimates that significant benefits will result from the reduced time and cost for fiduciaries to obtain compensation information needed to fulfill their fiduciary duties, the discouragement of harmful conflicts of interest, reduced information gaps, improved decision-making by fiduciaries about plan services, enhanced value for plan participants, and increased ability to redress abuses committed by service providers. These benefits will outweigh the costs associated with the rule.

  12. COMPLIANCE ALERT For attentive plan sponsors, those excessive payments will be indentified during the process of the 408(b)(2) disclosures…However, I am concerned that plan committees will fail to evaluate and benchmark those payments. If my fears prove to be well-founded, it will inevitably lead to litigation. -- Fred Reish, Chair of ERISA practice at Drinker, Biddle & Reath Source: Plan Sponsor Magazine September 2012

  13. WHAT IS REASONABLE • Not defined by DOL, ERISA or Fee Disclosure regulations • Expenses and quality should be considered

  14. EVALUATING FEES • Benchmarking • Request for Proposals

  15. SEEK PROPER ASSISTANCE

  16. TOTAL COST IS IMPORTANT • Focus is on revenue sharing & hidden fees • ERISA does not differentiate between types of compensation paid • Plan must be administered for the benefit of participants

  17. PROCESS MATTERS MOST • Lowest fees aren’t always the best • Compare services of providers • Determine other factors specific to the needs of your plan • Document, document, document

  18. 401K PLANS HAVE CHANGED

  19. OPPORTUNITY EXISTS • Fees have come down • Your plan needs may have changed • Providers have enhanced services • Additional Participant Tools Available • New Protections for Plan Fiduciaries

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