Advisors need to take the changing landscape of retirement
plan fee reporting and use it to their advantage to demonstrate their value to
their clients, says Robert Kaplan, ING Investment Management's U.S. national
retirement consultant and 401(k) technical expert.
In addition, advisors can use their expertise to demonstrate
their value to potential clients who are retirement plan sponsors, says Kaplan,
who spoke during a recent ING-sponsored webinar for financial advisors.
Although some fee reporting deadlines have already passed,
the real opportunities to demonstrate value to a client are still there, Kaplan
notes. Retirement plan participants will be confused and will want explanations
of fees once they start getting 401(k) and other retirement plan quarterly
reports that show fees being taken out of their accounts where they did not see
that information before.
The U.S. Department of Labor has begun requiring retirement
plans to report their fees to plan sponsors and, in turn, requires plan
sponsors to begin reporting fees to plan participants-i.e. their employees.
"You need to be there to tell them these are fees that
were always charged but that are now being reported differently," Kaplan
says. "The sponsors and participants are going to want to know what they
are getting for their fees."
The advisor can help the plan sponsors-the employer-by
meeting with them and with participants to hold their hand through the process
until the new reports become routine, he says.
"As long as the fees are reasonable and you can show them what they are getting for their fees you will be okay," Kaplan says. "But you have to be ready to educate the participant because they probably do not know they now pay fees for their retirement plans."
Kaplan says it's imperative to tell plan sponsors they need
to pay strict attention to the fee reporting requirements or risk increasing
their chances of an audit by the U.S. Department of Labor. If they are late
with their required filing, they need to do so as soon as possible.
-Karen DeMasters