Securian’s Method of Allocating Revenue Sharing May Help Fiduciaries

July 19, 2011 (PLANSPONSOR.com) – With upcoming fee disclosure rules, retirement plan service providers face major changes in the way they account for and disclose fees and revenues associated with retirement plans.

According to a press release, Fred Reish, Chair, Financial Services ERISA Practice, Drinker, Biddle & Reath LLP, co-authored a paper that shows how Securian Retirement’s fee disclosure and revenue sharing process (called SA2M for Securian Actual Allocation Method) allows plan sponsors to meet – and possibly exceed – the requirements of ERISA to use a prudent allocation method.  

In their paper, “Fiduciary Issues Related to the Allocation of Revenue Sharing,” Reish and co-author Bruce Ashton point out that plan sponsors cannot meet their fiduciary obligations under federal law without detailed knowledge of all fees and revenues associated with their plans and without considering the impact of revenue sharing on the participant accounts. The authors say Securian’s process supports plan sponsors by addressing both sides of the investment expense equation.

“Securian’s system ensures that the accounts of those who select a particular investment bear the costs associated with that investment,” wrote the authors, according to the press release. “In addition, it ensures that the same accounts receive … a return of their share of the revenue sharing.” 
 

Rick Ayers, vice president, Securian Financial Group, Inc., said in the announcement: “We made the decision nearly 20 years ago to provide full disclosure of the fees we charge and return revenues we receive from mutual fund companies. At the time, it seemed the right thing to do. Now the federal government sees it that way too.”  

More about Securian Retirement is here  

The white paper can be downloaded from here.

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