It seems as though, for all the fanfare and excitement of fee disclosure, in the end, nobody cares.

The financial industry has done its most to keep the information out of the hands of those who could use it. The regulators seem to think this is normal, and ignore the real need of the employees. And employees, for their part, well, at some point they just stopped caring. 

And who could blame them? Fee disclosure has become the latest version of "Where's Waldo?" and it quite simply takes a lot of effort to dig out the relevant information. Why bother? After all, even if disclosure revealed everything any employee would want, what use would it be? I mean, what are their options? Quit the company? That's not very realistic. About the most they can do is complain. And where does that usually get the employee? You see where we're going here. 

So what is the point of participant fee disclosure? Sure, it all sounds nice, transparency and all, but isn't it much more important that plan sponsors get fee disclosure? And, by "get" I mean "understand."

You see, the whole point of fee disclosure isn't to get the plan participants to do something about it, it's to get the plan sponsor to do something about it. They're the ones with the fiduciary duty. They're the ones with the decision-making authority. They're the ones whose neck is on the line. The participants? They're just innocent bystanders in this whole thing. 

Which brings us to the DOL. What were they thinking? Here's a snippet of their justification for 404(a)(5) (from their fact sheet):

"The rule will ensure: that workers in this type of plan are given, or have access to, the information they need to make informed decisions, including information about fees and expenses; the delivery of investment-related information in a format that enables workers to meaningfully compare the investment options under their pension plans; that plan fiduciaries use standard methodologies when calculating and disclosing expense and return information so as to achieve uniformity across the spectrum of investments that exist among and within plans, thus facilitating 'apples-to-apples' comparisons among their plan's investment options; and a new level of fee and expense transparency." 

Setting aside the relevancy (or irrelevancy) of expense ratios, just what is actionable about fee disclosure in terms of "the spectrum of investments"? When it comes to plan level fees, such as recordkeeping, administration, and fiduciary consulting, all those fees are the same no matter what investment option the employee selects.

In all cases, whether the fees are per capita, fixed, or based on assets under management, it doesn't matter where the employees money is invested, the fees will stay the same. Now, granted, in a non-fiduciary environment, this may not be the case, but, in terms of best practices for plan sponsors, I don't know of anyone who would seriously advocate a plan sponsor not use a true fiduciary.  

Does this mean 404(a)(5) is no longer needed? Groucho eventually did need that printing press. But other factors may cause us to question the viability of continuing participant fee disclosure in its present form. More on that next week.