Retirement Plan Industry predictions for 2012

Some of my predictions have come true (I knew the IPad would be a big hit) and some have not (I thought was crazy to sell stuff besides books, music, and DVDs). However, that doesn’t stop me from making predictions on what will happen in 2012, which I think is a huge transitional year in the retirement plan business because of some major regulatory change.

As for the fee disclosure changes, many plan sponsors will still be apathetic about plan expenses and their duties under the regulations. Some providers will thrive under the fee disclosure model, others will not. Some of the plan providers that were a little trick as to hidden plan costs will try to find a loophole with the regulations to continue to hide their fee.

Many providers will still wait until the very last minute to make sure their client service agreements satisfy the fee disclosure regulations. I still know a great ERISA attorney who will draft such agreements for $1,000 (cheap plug).

The Department of Labor (DOL) regulation on financial advice will have a little effect. Third party advice providers like will grow in business, but most advisors will not offer it themselves because of the huge audit expenses attached with offering it.

The DOL will implement a new fiduciary rule towards the last half of 2012, many broker-dealers (especially the smaller ones) will either partner up with ERISA §3(38) fiduciaries or leave the retirement plan business. The larger broker-dealers will find the way to survive in a business where they will have to be considered a plan fiduciary.

There will be more ERISA §3(38) fiduciaries entering the market, which means there will be some who do not have the background to effectively fill that role.

Multiple employer plans (MEPs) will continue to thrive, so the reports of their death will be greatly exaggerated. Expect the DOL to offer guidance on who may or may not be a plan sponsor of a MEP.  

Will these predictions happen? Who knows? We’ll see in the future.

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