During a recent conference call at an industry meeting, Jeffrey Turner, EBSA’s deputy director charged with enforcing the rules affecting DC plans, took credit for lower fees, quality and greater transparency in 401(k) plans. There’s no doubt that DOL’s 2012 rules requiring greater disclosure of fees helped focus attention on those issues — perhaps giving the PBS Frontline crew and Yale’s Prof. Ian Ayres the inspiration for their recent actions — but much of the research has shown that plan sponsors, and especially participants, have not taken dramatic action as a result.
By 2012 the market had been moving in the direction of greater transparency as a result of advisors’ and providers’ efforts, helped along by the development of third-party tools as well as 401(k) fee lawsuits. Certainly the 2012 rules did bring more attention to that movement and provided everyone with more information about fees.
But critics argue that focusing solely on fees without addressing quality can be misleading, and might not actually contribute to higher quality as Turner suggested. So while no one can argue that transparency is a bad thing or that fees should get less scrutiny, the industry is pushing to add quality of service to the discussion so that the real issue — value, not cost — is addressed. Ultimately, the discussion should be about results, based on the retirement readiness of participants.
