A Department of Labor proposal to increase the fee information that all ERISA plan service providers must make to plan sponsors should make clear that businesses that serve mutual funds including investment managers, brokers and accounts will not be considered as providing services directly to the plans that use those mutual funds, said Paul Schott Stevens, president and CEO of the mutual fund industrys Investment Company Institute, testifying at a DOL hearing today.
Unless the DOL makes that clear, the hundreds of service providers to a mutual fund might have to enter plan-service contracts with the thousands of plans that might offer the mutua1 fund as an investment option, Mr. Stevens said.
Mutual funds have dozens sometimes hundreds of service providers, none of whom has any idea about the extent to which particular employee benefits plans are invested in the mutual fund, Mr. Stevens said. If these entities were turned into service providers to every plan that invests in the fund, it would at the very least become extremely costly and difficult for mutual funds to be offered to employee benefit plans.
Other industry officials also urged the DOL to reconsider its proposal to make its wide-ranging new fee-disclosure requirements effective 90 days after their final adoption.
We need a full year to get ready, said Douglas Kant, senior vice president and deputy general counsel for Fidelity Investments.