Retirement plan executives know more about the fees they pay providers, advisers and consultants than they did three years ago, but only half said they were confident that they fully understood the fees, according to a survey by Chicago-based research and consulting firm Spectrem Group.
The survey of 159 corporate plan executives found that the number who believed they paid no fees dropped to 9%, compared with 23% in a similar survey the firm conducted in 2005. Four-fifths of respondents (84%) said they received a written fee disclosure statement from their plan providers and 88% received one from their advisers and consultants. Despite receiving these disclosure statements, only half of the executives said they were confident they fully understand the fees charged by their advisers and consultants. Just 43% said they were confident they fully understood the fees charged by their plan provider.
The Department of Labor recently announced it is planning to implement new fee disclosure regulations for participant-directed defined contribution plans. This is probably a good idea given what the survey found, said Gerry O'Connor, director at Spectrem Group.
“Most plan sponsors are not experts at retirement plans and to deconstruct all the pricing is a complex job,” Mr. O'Connor said in a phone interview. “If you look at any group of plan sponsors, a fair number of them just don't have a clue about what they're paying. ... The regulations will at least ensure that the information is there.”
Asset sizes of the plans surveyed ranged from less than $10 million to more than $50 million. Plan executives were surveyed in July. — Jennifer Byrd
