An interim regulation from the Labor Department on fee disclosure by defined contribution plan service providers should be issued in June, ERISA attorney James M. Delaplane Jr. predicted.
The final regulation probably will require some unbundling of fees by bundled providers, he noted.
He expects the final regulation on fee disclosure to plan participants by plan sponsors to be released in June, July or August, but it won’t be effective for a year.
Mr. Delaplane, partner at Davis & Harman in Washington, made his remarks during a keynote address at Pensions & Investments’ 18th annual East Coast Defined Contribution Conference. The conference was held March 7-9 in Miami.
Despite the anticipated DOL regulations, Mr. Delaplane said chances are “pretty good” that the House will pass a fee disclosure bill that will be a compromise from Rep. George Miller’s legislation. Mr. Miller, D-Calif., is chairman of the House Education and Labor Committee. The Senate, however, “shows no interest” in passing any fee disclosure legislation, he said.
Mr. Delaplane said investment advice had gotten “a pretty big head of steam” in Washington, but Mr. Miller’s proposal to turn back the Labor Department’s 2001 SunAmerica opinion letter “hit a brick wall.”(In that letter, Labor Department officials said money managers could avoid conflicts of interest if they provided advice generated by an independent third party through a computer model. In addition, fees charged by the third party couldn’t vary based on what investment options a participant selected.)
“We are not going to have legislative change on investment advice from this Congress,” he predicted.