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In 2009, Vazquez said, the company made a decision to make a change or consider a change in the providers they were using for their plan. They finally decided in 2010 to change providers. “Going through that process we found that our primary objective of restructuring our system, the benefit around fees, developed and manifested itself, and there were actually fees that were being charged for services we did not know about and that we were not receiving,” said Vazquez.After implementing the new structure, Vazquez said most of the fees and the fee structure went down for the plan participants significantly.According to Vazquez, in order to perform this type of audit you need to have the right type of quality input and participation from experts in the field in order to make the entire process less threatening.Moving forward with the adoption of 408(b)(2), Hagan suggests that plan sponsor verify the services that they are paying for from vendors are received as promised. Plan sponsors should test fees against the services that are received. It is appropriate to also challenge the pricing structures.The plan sponsor should also evaluate investment consultants and money investment managers against the value added work they are asking them to provide. “I’m suggesting that collectively plan sponsors have an understanding of what mutual fund managers do and how they do it,” added Hagan.Recordkeepers and third-party administrator fees should also be examined in order to ensure no overpayments are made.And finally, Hagan suggested that during this first year of the 408(b)(2) regulation being in place, plan sponsors should consider conducting an audit as a prerequisite to complying with the regulation (see "White Paper Examines Benefits of a 408(b)(2) Audit").“In this new era, it is up to the plan sponsor to take the steps necessary to become informed. Close that information gap that exists,” added Hagan.
In 2009, Vazquez said, the company made a decision to make a change or consider a change in the providers they were using for their plan. They finally decided in 2010 to change providers. “Going through that process we found that our primary objective of restructuring our system, the benefit around fees, developed and manifested itself, and there were actually fees that were being charged for services we did not know about and that we were not receiving,” said Vazquez.
After implementing the new structure, Vazquez said most of the fees and the fee structure went down for the plan participants significantly.
According to Vazquez, in order to perform this type of audit you need to have the right type of quality input and participation from experts in the field in order to make the entire process less threatening.
Moving forward with the adoption of 408(b)(2), Hagan suggests that plan sponsor verify the services that they are paying for from vendors are received as promised. Plan sponsors should test fees against the services that are received. It is appropriate to also challenge the pricing structures.
The plan sponsor should also evaluate investment consultants and money investment managers against the value added work they are asking them to provide. “I’m suggesting that collectively plan sponsors have an understanding of what mutual fund managers do and how they do it,” added Hagan.
Recordkeepers and third-party administrator fees should also be examined in order to ensure no overpayments are made.
And finally, Hagan suggested that during this first year of the 408(b)(2) regulation being in place, plan sponsors should consider conducting an audit as a prerequisite to complying with the regulation (see "White Paper Examines Benefits of a 408(b)(2) Audit").
“In this new era, it is up to the plan sponsor to take the steps necessary to become informed. Close that information gap that exists,” added Hagan.
Tara Cantoreeditors@plansponsor.com