401(k) Fee Disclosure Rules Show Minimal Impact

It turns out that people either don’t care or don’t pay too much attention to retirement plan investment fees. The Plan Sponsor Council of America’s most recent survey on the impact of fee disclosures on participants has shown only a 1.4 percent increase in the number of investors who grill sponsors about disclosure statement details. And though more detailed disclosures go into effect on November 14, potentially precipitating an increased response, the reactions to disclosures so far have been largely neutral.

The survey reported that 95.9 percent of plan sponsors saw precisely zero change in how participants behaved as a consequence of fee disclosure information; however, with the heightened transparency of cost disclosure, 15.4 percent of sponsors did send out requests for proposal or requests for information to search for potential better plan opportunities. For retirement plans consisting of between 100 and 1,000 participants, about 25 percent were motivated to look for better options as a result of the new disclosure regulations.

Of the very small proportion of participants who did decide to ask sponsors to make changes to their plans, less than 3 percent requested changes in their asset allocations, and a similarly small percentage asked to add or drop an investment fund or increase their deferral rate.