By Jeremy Morris, Associate Editor, US Daily Review.
“Fee disclosure requirements are the most important change to the 401(k) plan since its inception more than 30 years ago,” said Timothy Slavin, Senior Vice President, Defined Contribution, Broadridge. “Financial firms are really starting to feel the pressure to make sure they’re fully compliant with the mandated 404(a)(5) regulation before it goes into effect this year.”
According to the survey, there is some concern about participant reaction to the new fee disclosures, with the majority of respondents (57 percent) noting that they expect participants to be somewhat interested upon receipt of their annual fee notice, and 24 percent expecting participants to ask a lot of questions and even ask plan sponsors to change plan providers.
“The key to staying ahead of participant reaction – whether positive or negative – is preparation and education. Firms need help to arm plan sponsors with detailed information to answer participants’ questions, as well as have call centers geared up and prepared to respond to inquiries in a timely fashion,” continued Mr. Slavin.
Adding to the theme of preparation, half of the respondents stated that they could use additional support in creating educational materials for participants and 28 percent noted that they need help with e-delivery consent gathering.
Looking ahead, firms are already thinking about what changes they anticipate making for next year’s fee notice with 29 percent hoping to introduce e-delivery for participants and 26 percent planning to look for new ways to stay competitive. “This is just the beginning. There is great opportunity for firms to enhance their services and ensure that they are providing the best offering for plan sponsors and participants,” added Mr. Slavin.
As a leading provider of advanced technology and outsourcing solutions to the financial services industry, Broadridge has developed fee disclosure approaches for the nation’s largest defined contribution plan providers.