Was a major financial professional organization covering up some important data in their comment letter to the SEC? Or is the industry’s 401k defense of 12b-1 fees much ado about nothing?
Tag "ICI"
Why wait until now to bring up the three-month old blog? The bigger question, however, remains, “How should a 401k fiduciary analyze mutual fund fees?”
The SEC does the right thing, and some 401k fiduciaries may find they’ve been doing the wrong thing.
Worried while Washington fiddles? These three vital questions might just help you determine if today’s DOL ruling will increase your personal fiduciary liability.
Investors have decided to flee two asset classes: stocks, perhaps because of their dramatic gains in the last six months; and cash, perhaps because of historically low interest rates. In either case, investors have signaled their lack of confidence in a near term recovery in the American economy.
One of the biggest liability risks facing the ERISA/401k plan fiduciary derive from the inability to properly disclose and educate plan participants. The primary reason for this gap may be due to lack of specifics from the DOL regarding plan document contents and distribution of key information to participants. The suggestions offered by the ICI should help remedy this gap.
The Supreme Court will raise the visibility of the fee structure within the investments of nearly half of all 401k plan assets. Just because the powers that be say it’s so, doesn’t necessary mean your average fiduciary can rely on the decree. Indeed, the Supreme Court of the United States appears poised rule in favor of mutual fund shareholders, yet, at the same time, mislead both 401k investors and fiduciaries.
A mutual fund’s expense ratio represents only one factor in analyzing the appropriateness of a mutual fund as an investment. Other factors may in fact be more important (including, among other things, portfolio manager tenure, number of holdings, total net assets, investment objective and consistency of returns).
