“The important thing is: The plan fiduciary has to be aware of all compensation that’s coming to their service provider as a result of services to the plan,” the official said.Īdvisers say they have anticipated strict guidelines from the Labor Department and that is why they have begun to offer more disclosure or to return mutual fund fees to participants.īut it is important that participants and plan sponsors understand the fee disclosure, said John Moynihan, president of Diversified Financial Advisors in St. “There’s a real question of whether participants will be able to understand, or make better investment choices, based on this mountain of information.”Ī Labor Department official said that the disclosure forms are meant to offer more information to participants and plan sponsors. “It’s going to require a lot of information be tracked and disclosed that’s not being tracked consistently and disclosed consistently,” said Ellen Goodwin, a former Labor Department lawyer who now works for Washington-based Groom Law Group. Industry insiders worry that these initiatives will force advisers to complete mounds of paperwork that will be ignored by plan participants.
Second, it will require service providers, such as advisers, to disclose indirect compensation to plan sponsors.įinally, it will mandate disclosure of indirect compensation to plan participants. First, it will require plan sponsors to disclose indirect compensation to the government. The Labor Department plans to take a three-pronged approach to improved fee disclosure. CHICAGO - As the Department of Labor puts pressure on advisers to make 401(k) fees more transparent, some financial advisers are refunding fees to participants that they are being paid from mutual fund companies.
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