Fee Disclosure Predictions

June 14, 2012 at 6:16 am Leave a comment

There has been a lot of industry talk about what will happen with the expected fee disclosures.   Some professionals take the position that participants will just toss or not read the additional disclosures.  Other professionals feel that there will be outrage and a call for lower fees.  Are these individuals going to extremes?  With the new chart, investment options should be easier to compare.  I cannot say that I have seen outrageous fees being charged against plans.   There are good and bad people in every industry, and I suspect there are abusive situations and those individuals should be held accountable.  However, I would hardly consider it the norm.  I also do not take the haughty view that participants will be too stupid to understand fee comparisons.  Given the right format, participants can compare fees just like they compare prices at the grocery store.  The chart is a step in the right direction.  Where the difference might come into play is with participants who do not understand when an additional expense might be worthwhile.  I would expect participants to move toward passively invested mutual funds and away from actively managed funds due to lower expense ratios.   Proponents of active funds will likely decry a move of this type.  I expect a much more toned down non-event.  Maybe I am too much of an optimist, and although I believe there is room for improvement regarding the disclosures, I believe participants will find the new disclosure valuable.

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Entry filed under: Ethics, Pension Reform, Retirement. Tags: , , , , , , , , , .

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Christine Gurney

A pension professional who shares her thoughts and ideas about the pension world for industry members and anyone else interested.

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