As he told the story, when he was 10, Groucho Marx wanted to be a writer. So he went to Bloomingdales and stole a printing press. Or at least he tried to.
He was caught on the way out and the store manager threatened to have him arrested. Bloomingdale himself walked by and inquired as to the situation. The manager told him and Bloomingdale huffed, “All the kids in this neighborhood steal. Let him go.” So Groucho went home scot-free, though without a printing press.
In case you’re wondering about the point of the story, think of the printing press as fee disclosure, Bloomingdale as the Labor Department, the store manager as the financial industry, and dear old Groucho as the naïve employee.
That, my friends, is the story of 408(b)(2) and its faithful companion 404(a)(5). In fact, if you want the full story, you can read it here: “Why Isn’t 401k Fee Disclosure Working?” (FiduciaryNews.com, April 7, 2015).
It seems as though, for all the fanfare and excitement of fee disclosure, in the end, nobody cares.
The financial industry has done its most to keep the information out of the hands of those who could use it. The regulators seem to think this is normal, and ignore the real need of the employees. And employees, for their part, well, at some point they just stopped caring.
And who could blame them? Fee disclosure has become the latest version of “Where’s Waldo?” and it quite simply takes a lot of effort to dig out the relevant information. Why bother? After all, even if disclosure revealed everything any employee would want, what use would it be? I mean, what are their options? Quit the company? That’s not very realistic. About the most they can do is complain. And where does that usually get the employee? You see where we’re going here.
So what is the point of participant fee disclosure? Sure, it all sounds nice, transparency and all, but isn’t it much more important that plan sponsors get fee disclosure? And, by “get” I mean “understand.”