In the eye of the storm as Americans pick up the pieces of their retirement savings is one regulator—and one of AdvisorOne’s 50 Top Women in Wealth—who is using bold strokes to help investors make the most of their retirement savings.
The Assistant Secretary of Labor of the Employee Benefits Security Administration (EBSA), Phyllis C. Borzi (left), will require transparency on costs to retirement plan sponsors and the participants who are captive in those plans. This is important because an additional 1% in fees can cost an investor dearly, resulting in a 28% reduction in retirement savings over a 35-year period, according to the Department of Labor (DOL). It difference reduces the growth of a $25,000 initial investment from $227,000 to $163,000—a very “substantial” difference.
Borzi has also proposed to broaden the scope of which advisors must act as fiduciaries under ERISA. Because advisors to retirement plans often recommend to the plan sponsors—who are fiduciaries to the plan and its participants—which investment choices to place in a retirement plan, this is a critically important issue to investors. The advisors sometimes also advise participants about what to choose inside their retirement plan account, their IRAs and what to invest in when they take money out of those plans.
In addition, Borzi has proposed rules to “enhance target date fund disclosures.”