Defined contribution plan executives want more information on fees, and they want it updated frequently.
According to a survey published this summer by Spectrem Group, Chicago, more than 60% of surveyed plan executives said the amount of fee information they require as part of requests for information today is considerably more extensive and detailed than it was three years ago. Questions regarding revenue-sharing practices have increasingly been added to RFPs.
Spectrem surveyed 150 plan executives during the second quarter.
DC plan providers say they are more than happy to oblige the new requests.
Kevin Crain, director of integrated benefits at Merrill Lynch Retirement Group, Pennington, N.J., said, "On the new business side of things, I have seen an increase in the last 18 months from consultants leading searches. We have a detailed schedule to complete on RFPs where we don't just detail the funds, but … (also) the expense ratios and revenue sharing agreements."
As for what is driving this movement, Mr. Crain said, "There was a great deal of talk in the DOL (Department of Labor) around greater disclosure and transparency of fees. It also has to do with consultants showing the value of what they do for clients" in requesting fee information.
John Doyle, vice president of marketing and communications at T. Rowe Price Retirement Plan Services Inc., Baltimore, said, "We've seen them (clients) ask for disclosure in a little more detail than in the past. When you talk about mutual funds, it's natural to inquire about fees. Fee disclosure is good for the biz and it's something we've always done. We encourage plan sponsors and consultants to ask for the information."
During the RFP process, "We disclose what our administrative fee payments are, and that helps in a decision-making process. We have agreements in place, and those are all disclosed during the sales process," he said.
Steve Patterson, vice president at Schwab Corporate & Retirement Services, San Francisco, said, "We're seeing an increase in questions in the RFP process. Part of their obligation as a fiduciary is to be able to understand where every one of those dollars paid is going. You need to know how much you're paying. It's clear what you're paying your record keeper and consultant. What is not clear is the expense ratio of each fund, how much of that money goes to the investment manager and how much is a fee offset?"