Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:'Plan Sponsors Would Shoot Us.' Fund Supermarts Worry Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, January 11, 2012

'Plan Sponsors Would Shoot Us.' Fund Supermarts Worry

News summary by MFWire's editors

Drinker Biddle & Reath partner Fred Reish is calling the Department of Labor's 401(k) plan fee disclosure rules "unworkable," Reuters reports. That unworkability is especially true for broker-dealers offering their mutual fund supermarkets through 401(k) plans as brokerage options (SDBAs).

The 401(k) fee disclosure rules are set to take effect on April 1.

"You are talking about possibly hundreds of different compensation arrangements that firms will have to disclose," Reish wrote in a letter of clarification dated December 12 that he sent to the DoL.

Brokerages say that the information they will be forced to disclose will not be useful to plan sponsors because of its huge volume and given that each plan has a unique fee structure.

Revenue sharing with mutual funds is at the heart of the matter.

Firms are now exploring what approaches they can use to comply with the disclosure rule including a "phone book approach." This approach means investors with SDBAs will be able to see a list of fees the firm receives for any investment option. Others are considering whether to disclose a possible range of compensation they get for each fund they offer.

A brokerage employee who asked Reuters not to be named said "plan sponsors would shoot us if we sent them a prospectus for every fund a participant held."

Managing director Lisa Bleier of the Securities Industry and Financial Markets Association told the news service that they want guidance on the form the disclosures should take.

Brokerages argue that though disclosing these fees for selected funds would make sense, disclosing all the fees of the thousands of funds they offer is too grueling. But for Mercer Bullard, an associate professor of law at the University of Mississippi, it was the industry that "created the complexity and now they are complaining about having to disclose it. This is a reflection of the broker-dealers choosing to operate in an environment where they charge everyone differently for identical services."

Brian Graff, CEO and executive director of the American Society of Pension Professionals and Actuaries, said the revenue sharing between mutual funds and broker dealers is just part of doing business.

"If everyone paid the same amount of compensation for everything, it would be less complicated but ... that's not how the free market operates," he explains.  

Edited by: HFD


Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

0.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2024: Q4Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly




©All rights reserved to InvestmentWires, Inc. 1997-2024
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use