ERISA 408(b)(2) and 404(a)(5) will certainly be game-changers in the industry. Many companies and advisors are worried that their clients will view their fees as too high. As we march closer to the disclosure deadline, it's time to educate participants about the various fees and their necessity.

Hard- vs. Soft-Dollar Expenses Plan expenses can be divided into hard-dollar and soft-dollar categories. Hard-dollar expenses include the fees charged for the day-to-day operations of the plan, such as plan administration, design and compliance. Employers usually pay these costs, but there are exceptions to this rule. Some employers pay for these expenses out of the assets of the plan, causing the participants to pay indirectly. Other hard-dollar costs include optional individual services, such as loan and distribution provisions, that typically charge one-time fees.

Soft-dollar fees cover many services, including record keeping, website services, automated access to investment information, customer education and advice services. The costs associated with money management, such as investment management fees, 12-b1 fees, sub-transfer fees, asset-based or wrap fees and revenue-sharing fees, are also soft-dollar expenses.