Move comes ahead of ramped-up government disclosure regs
In anticipation of upcoming DOL regulations, Putnam Investments today said it will provide enhanced fee disclosures for participants in the retirement plans the company administers.
Putnam will make the disclosures available on its plan participant website this month. The site will provide details on expense ratios, transactions and their respective fees. It will also break down the costs of other types of services, including online advice and self-directed brokerage.
This is not the first time Putnam has expanded the information it offers about its plans. In May, the firm began providing increased fee disclosures for plan sponsors. That move came ahead of the release of interim final Labor Department regulations that require service providers to disclose the fees and services they provide to sponsors. The regulation will take effect July 16.
The Labor Department is expected to release final regulations on participant disclosure soon, as the 90-day review period for the rule ends this month.
The added fee information Putnam is making available for plan participants won't be as detailed as what their employers get, however. One example: Plan sponsors have access to the cost of plan adviser and consultant services. But plan participants won't have access to any information on plan adviser compensation in the newly enhanced disclosures.
“[Currently] there's little information available for the plan participant,” said Edmund F. Murphy III, managing director and head of defined contribution at Putnam. “We list all services so that participants know what they're paying for, and understand the true value of the plan.”
Some experts in the industry have said that fee transparency mandated by the DOL could pave the way for litigation since participants will be able to spot high plan expenses.
Mr. Murphy disagrees.
“Our approach accomplishes what needs to be accomplished, but doesn't put people in the position of, ‘My fee is 325 basis points, and your fee is 150 basis points, so I need to change my investment decision to bring down fees,'” he said. “I think what we accomplish is people understanding the whole picture and how underlying funds perform.”
Mr. Murphy added that he doesn't anticipate increasing litigation from plan participants as a threat amid enhanced disclosures, because plan sponsors have become “more mindful of their overall opportunities.”
“At the end of the day, we believe that a knowledgeable investor is what really matters,” he said. “Any step we can take to demystify that process is a good one.”
