With Fee Disclosure, Some Burgeoning Retirement Industry Businesses

Over the years, I have come up with a lot of get rich quick schemes. Problem is most of them stink. I think the fee disclosures coming to retirement plans in July will open up a lot of new positions in the retirement plan industry, just like Sarbanes-Oxley did for audit firms.

As time goes on, there will be more demand for ERISA §3(38) fiduciaries. As plan sponsors get overwhelmed with fee disclosure, which I believe will actually increases fiduciary liability (since they now will know their fees), more and more plan sponsors will want to eliminate almost all of their fiduciary liability. Aside from terminating their retirement plans, the only way to do that is to hire a 3(38) fiduciary.

Aside from 3(38), another booming business will be retirement plan consultants. Fee disclosure is only good if plan providers are honest about the fees they charge and the compensation they receive. So the only way to make sure that the plan providers are honest and to protect a plan sponsors from having the relationship with the plan providers be considered a prohibited transaction, they may have to hire a consultant to determine whether the disclosures made by the plan providers are correct or not.

For those who understand the nature of how the 401(k) industry works, they will be quick to prosper. Companies like brightscope.com, 401(k) Rekon, and providers offering exchange traded funds are already ahead of the game.