Newly proposed regulations by the Securities and Exchange Commission on the marketing and advertising of target-date funds don't appear to portend problems for the defined contribution industry, according to interviews with several major players in the DC universe.
The proposed regulations shouldn't create too much regulatory, fiduciary or financial stress, experts said following an initial review of the SEC rules issued in mid-June. However, they added that the SEC must make sure the final rules avoid micro-managing the industry for fear of confusing participants or handcuffing sponsors and providers.
“The SEC has to walk a fine line between giving participants good information and giving information that they can't interpret or can't understand,” said Lori Lucas, executive vice president and defined contribution practice leader for Callan Associates Inc., San Francisco. “I think the SEC understands the need for informing people without overburdening them.”
The SEC “did a good job of requiring disclosure without going overboard,” added Jan Jacobson, senior counsel for retirement policy for the American Benefits Council, Washington.
Based on an early examination of the SEC proposals as well as conversations with several members of her association, “our preliminary response is that I think from a plan sponsor perspective. they'll be happy,” Ms. Jacobson said. “Service providers were expecting something. They may not necessarily be happy with the requirements, but they don't feel that it's going too far.”
The ink is barely dry on the 101 pages of fine print that include and accompany the proposals. The SEC is seeking public comments through Aug. 23, and trade associations say they will be filing detailed responses.
(Click http://sec.gov/rules/proposed/2010/33-9126.pdf for the proposal.)
In an e-mail response to questions about the proposed changes, Edward Moslander, senior managing director for institutional development at TIAA-CREF, said: “While it will add some cost, it will have a positive impact on the industry by increasing trust among plan sponsors and participants.
“Based on a preliminary review, I don't see anything in the proposed rule that is particularly alarming for the employer community,” Edward Ferrigno, vice president of Washington affairs for the Profit Sharing/401k Council of America, Chicago, said in an e-mail.