WASHINGTON — With few exceptions, defined contribution plan executives and their consultants gave a collective shrug of the shoulders to new SEC rules mandating mutual fund board independence.
But experts predict finding mutual fund directors will become more difficult. And one consultant believes the Securities and Exchange Commission's move raises the governance hurdle.
Fund governance generally isn't a high priority among 401(k) plan executives and their consultants.
"Will this materially impact the decision-making process in choosing DC plan options? I would be very surprised to see that the board structure plays a very big role," said Robert Hunkeler, vice president and director of investments, International Paper Co., Stamford, Conn. Mr. Hunkeler oversees about $3.8 billion of defined contribution plan assets and is chairman of the defined contribution plan committee of the Committee on Investment of Employee Benefit Assets, Bethesda, Md"Most plan sponsors evaluate mutual funds by judging the investment management team. You make sure the people around them are managing the administration well and look at the organizational structure, but that review typically doesn't include the board of the mutual fund," Mr. Hunkeler said.
Consultant Russell LaBarge agreed. "Plan sponsors don't pay a lot of attention to the board of directors of mutual funds. Boards don't dictate investment policy," said Mr. LaBarge, a principal at Strategic Capital Advisors Inc., Oak Brook, Ill.