Maybe it’s an insecurity of mine, but I always felt and still do that there are many times that I haven’t been taken seriously. There were family situations and professional situations where that came to be and it wasn’t a good outcome for those that didn’t take me seriously.
I have been an ERISA attorney since 1998 when the stock market was booming and that meant that daily valued 401(k) plans were part of that boom. Even when I started out, I was alarmed about revenue sharing because it just didn’t seem right to me that some funds paid them and some didn’t and those that paid revenue sharing to the plan administrator had a better shot to be picked. Plans that just offered index funds were few and far between because they were considered as being more expensive to run because of the lack of revenue sharing payments. I was also amazed that while a plan sponsor had the fiduciary duty to pay only reasonable plan expenses, they had no way of knowing how much their plan providers were charging them unless the plan provider was transparent and prior to 2008, that was few and far between.
When I first heard about litigation concerning revenue sharing, it was a lawsuit against Nationwide Insurance in 2000 and in those days, plan sponsors were the usual victors. Then times changed and court started recognizing participant rights and made it easier for them to sue. With a falling stock market in the early 2000s and the late 2000s, there was an increased call for free disclosure because litigation against plan sponsors were increasing.
About 8 years ago, I was starting to be openly critical about revenue sharing and TPAs being less than transparent. Well, there were a lot of people I knew who laughed at me and that included co-workers at the time. Well, they aren’t laughing anymore. Fee disclosure regulations, more litigation, and more competitive fee pricing have changed the 401(k) plan business for the better.
The point is that change is inevitable and that was fee disclosure was inevitable because of a spotlight shown on 401(k) plans because of the poor savings and investment returns went the stock market went through two major corrections in the past 14 years. There is no business that is stagnant except maybe those in the funeral business and any ideas of change shouldn’t be scoffed at or dismissed.