Three sure-fire 401(k) predictions for 2012

When the new fee disclosure regualtions become effective this year, 2012, many plan participants will be unpleasantly surprised. Many will begin the ask questions about the fees they are paying and why. Plan sponsors can be proactive by having an independent benchma

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rk analysis done on their plan.

2) April’s implementationof the DOL’s new Fee Disclosure Rule will create a bigger headache for 401(k) plan sponsors than for 401(k) service providers. Of course, the implied prediction here – that self-serving 401(k)  service providers won’t yet again convince the DOL to defer implementation of this rule – stands as the bolder prophecy. Still, assuming 401(k)  investors start seeing the actual fees they pay sometime in the second quarter, expect to witness the greatest case of collective sticker shock ever. And who will they turn to with their complaints? Their 401(k)  plan sponsor’s friendly HR department. When in doubt, shoot the messenger. And who will the messenger shoot?3) By the end of the year, bundled service providers’ fees will be dropping dramatically. But it may be too late for them. After decades of hidden fees and avoiding the “fiduciary” label, 2012 finally catches up to them and exposes the self-dealing behind the curtain. Lowering fees can’t make up for the loss of trust and reputation, as 401(k)  plan sponsors move en mass away from the bundled model and adopt a “best of breed” approach.

The day of the bundled provider is quickly ending. Plan sponsors need to get out of the way of this tsunami.

Please comment or call to discuss how this affects you and your organization.

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