PRESENTATION SUMMARY

• Fee Disclosure Requirements• Examining Disclosure Documents• Evaluating “Reasonableness” of Fees• Assessing Value• Maximizing your Company’s Plan

PURPOSE

Provide Information the Plan Needs to:• Assess reasonableness of

compensation• Identify potential conflicts of interest• Satisfy reporting and disclosure

requirements

REQUIREMENTS

HIDDEN FEES

COMPENSATION DISCLOSURE• Direct Compensation• Indirect Compensation from source

other than the plan such as 12b-1 fees, soft dollar arrangements or finders fees

• Fees the service provider pays affiliates or subcontractors

• Termination fees

DISCLOSURE SAMPLE

DISCLOSURE SAMPLE

DISCLOSURE SAMPLE

DISCLOSURE SAMPLE

DESIRED OUTCOME VS. REALITY

FROM DOL.GOV• EBSA estimates that significant benefits will result

from the reduced time and cost for fiduciaries to obtain compensation information needed to fulfill their fiduciary duties, the discouragement of harmful conflicts of interest, reduced information gaps, improved decision-making by fiduciaries about plan services, enhanced value for plan participants, and increased ability to redress abuses committed by service providers. These benefits will outweigh the costs associated with the rule.

COMPLIANCE ALERT

For attentive plan sponsors, those excessive payments will be indentified during the process of the 408(b)(2) disclosures…However, I am concerned that plan committees will fail to evaluate and benchmark those payments. If my fears prove to be well-founded, it will inevitably lead to litigation. -- Fred Reish, Chair of ERISA practice at Drinker, Biddle & Reath

Source: Plan Sponsor Magazine September 2012

WHAT IS REASONABLE

• Not defined by DOL, ERISA or Fee Disclosure regulations

• Expenses and quality should be considered

EVALUATING FEES

• Benchmarking

• Request for Proposals

SEEK PROPER ASSISTANCE

TOTAL COST IS IMPORTANT• Focus is on revenue sharing & hidden

fees• ERISA does not differentiate between

types of compensation paid• Plan must be administered for the

benefit of participants

PROCESS MATTERS MOST• Lowest fees aren’t always the best• Compare services of providers• Determine other factors specific to

the needs of your plan• Document, document, document

401K PLANS HAVE CHANGED

OPPORTUNITY EXISTS

• Fees have come down• Your plan needs may have changed• Providers have enhanced services• Additional Participant Tools Available• New Protections for Plan Fiduciaries