Many defined contribution service providers are not complying with the letter or even the spirit of fee disclosure regulations, said Phyllis Borzi, assistant secretary of labor and head of the Employee Benefits Security Administration.
Some vendors give their plan sponsor clients “a laundry list of services they may provide” and a range of fees for those services, Ms. Borzi said.
“This wasn't what we had in mind.”
Ms. Borzi was speaking Thursday via a live webcast from Washington to attendees of the Plan Sponsor Council of America's 66th annual national conference in Scottsdale, Ariz.
Ms. Borzi said service providers should be disclosing to each client the specific services provided to that plan and the specific fees for those services.
She also talked about her office's advance notice on proposed rule-making for a lifetime income illustration. She explained Labor Department officials take such a step “when we think there is a problem (but) aren't sure regulation is the answer,” or when Labor Department officials are thinking about regulation, but aren't sure.
“Both were true in this case,” Ms. Borzi said.
On the issue of the definition of a fiduciary — now known as the proposal on conflict of interest — Ms. Borzi said her staff is working now on prohibited transaction exemptions that will be part of the proposal. She said the proposal will not be issued next month as planned, and she couldn't predict when it will be ready.