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To bundle or not to bundle

In the new world of the fee disclosure rule, 401(k) plan sponsors may find its better to have paid more for best of breed than suffer the potential liability of one-stop shopping.

By Christopher Carosa | Updated on April 01, 2012

In early February the DOL announced the guidelines for its new fee disclosure rule. Sadly, the DOL (again) pushed back the implementation date three months to July 1. It’s sad for two reasons. First, it only delays the inevitable and perhaps hurts investors. Second, it now precludes the delicious irony of exposing once hidden fees on April Fools’ Day and, given the conflict-of-interest ramifications of revenue sharing, the opportunity to mention “a fool and his money are soon parted.”

Fiduciary proponents no doubt delighted in the forthright aggressiveness of the DOL’s promotion of these new guidelines. Its simple rule to 401(k) plan sponsors should they find a service provider fails to properly comply with the new rule: Fire them. It wasn’t a suggestion; it was an order. This may place some vendors between a rock and a hard place. By showing 401(k) plan sponsors they were saving pennies while losing dollars, it may discourage those 401(k) plan sponsors from selling their soul for one-stop shopping.

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Christopher Carosa

Christopher Carosa

Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).

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