The Greenwood Village, Colorado-based provider has developed a template that not only combines the fee disclosure elements in a single document, it also includes the disclosure of fees not required by the Department of Labor’s new 408(b)(2) requirements. For example, Charlie Nelson, president of Great-West Retirement Services, explained that the firm’s new disclosure format presents fees in dollars and percentages, rather than formulas, though that isn’t required by the new regulations.
The fee disclosure document itself displays the fees paid by a plan in three distinct categories, those paid to:
- The investment provider
- The recordkeeper
- Other third parties
That information is presented as a single number, as well as an estimated average cost per participant in each category, and the total presented not only as a single figure, but also expressed as a percentage of plan assets.
Beyond the summary information, the disclosure document also breaks down those pieces to show how cash flows from one party to another, including the flow of revenue-sharing dollars to the recordkeeper, and how that money is distributed to third parties on behalf of the plan. Payments to the recordkeeper are further delineated by categories such as plan services, participant services, and “other” services, and deeper in the document are presented in an even more granular detail. Payments to investment providers include the detailing of 12b-1, and administrative expenses, as well as the net expense ratios for each fund. Additionally, Great-West is disclosing fees associated with its General Account.
Great-West has engaged DALBAR to work on the design of the template , and to certify its compliance. Additionally, Nelson noted that Great-West shared the template with a number of advisers and third-party administrators who provided additional input into the design of the document. “We believe it’s important that plan service providers work together to provide these documents to plan sponsors,” he said. “It’s critical that plan sponsors have access to comprehensive, easy-to-understand information so they’re aware of all the services different providers deliver to the plan and its participants.” Great-West also worked with focus groups of plan sponsors in developing the template design.
A sample template is available upon request by emailing firstname.lastname@example.org.
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