GAO Review Finds Fee Disclosure Helpful, but Still Tricky

Although concerns continue that disclosures are hard for savers to understand, the Government Accountability Office found the regulations helpful to plan sponsors and participants.

The Government Accountability Office on Monday published findings that indicate more than a decade of fee disclosure regulation has led to “positive benefits” for plan sponsors and participants, though concern remains about their eligibility for the target audience.

The GAO, the nonpartisan investigative arm of Congress, undertook the study to consider the effects of two 401(k) fee disclosure regulations implemented by the Department of Labor in 2010 and 2012. The first requires service providers to share the fees they receive for providing plan-related services to plan fiduciaries; the second requires plan administrators to provide plan and investment fee information to participants and their beneficiaries.

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To follow up on the effect of those regulations, the GAO conducted a review of literature, relevant regular documentation and interviews with 13 stakeholder groups from the retirement industry, including service providers, plan sponsors, researchers and 401(k) advisers. The study was performed from October 2023 through September 2024 and drew conclusions about:

  • Plan Sponsor Benefits: Fee disclosures provided to plan sponsors helped increase their “awareness and ability to manage their plans,” in particular for smaller plans that would otherwise not have had access to fee information;
  • Participant Benefits: Fee disclosures also gave participants more knowledge of and involvement in their 401(k) plans—potentially giving people more confidence to contribute to the plan; and
  • Legibility Concerns: Some stakeholders raised concerns about whether participants understand the information provided to them.

To address that concern about comprehension, the GAO wrote, “plan sponsors and service providers can modify their fee disclosures or provide education to increase participant financial literacy, according to these stakeholder groups.”

According to the GAO, it conducted the study in part because employer-sponsored retirement plan fees affect millions of workers saving for retirement.

It conducted a separate report in July 2021 evaluating participants’ understanding of fee disclosures. In that report, the GAO found that 40% of participants did not fully understand fee information, and 41% did not know they paid fees. Congress than asked the watchdog to get retirement industry stakeholder opinion, which resulted in the report released Monday.

Regulations have not stymied litigation against plan fiduciaries focused on allegations of overcharging for plan administration costs and fees for plan investment options.

The GAO, in noting that plan fees have been lowered since 2012, found most stakeholders did not see that decline as the result of the disclosures. Instead, they cited the threat of litigation, innovations in technology and competition among service providers as leading factors in fee compression.

The GAO also found that regulations may have contributed to plan sponsors providing more investment menu options to participants. Citing data from PLANSPONSOR DC plan benchmark surveying, the GAO noted that plan sponsors reported an average of 26 investment options in 2023, up from 21 in 2013. PLANSPONSOR is a sister publication of PLANADVISER.

The DOL provides free resources to assist plan sponsors and service providers in monitoring and implementing fee disclosures and transparency. The department will report on the implementation of its regulations in two required reports due in December 2025, according to the GAO report.

The GAO team that produced the report was led by Tranchau (Kris) Nguyen, its director of education, workforce and income security, and is posted in full at this link.

Advisory M&A News – 10/28/24

Arthur J. Gallagher & Co. acquires Redington Ltd.; Hyperion Partners joins MAI Capital Management; Modern Wealth Management acquires RIA Petso Financial; and more.

Arthur J. Gallagher & Co. Acquires Redington Ltd.

Arthur J. Gallagher & Co. announced the acquisition of London-based Redington Ltd., an investment consulting firm providing comprehensive investment, research and technology services to pension funds, wealth managers and institutional investor clients, primarily in the U.K.

Redington CEO Sylvia Pozezanac and her team will remain in London under the guidance of David Piltz, head of Gallagher’s U.K. employee benefits and HR consulting operations.

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“As a leader in the investment consulting space, Redington brings exceptional talent and represents a fantastic cultural fit,” J. Patrick Gallagher Jr., Gallagher chairman and CEO, said in a statement. “Their deep capabilities in modeling and investment market research will enhance our existing consulting services and help our clients achieve superior financial security outcomes.”

Arthur J. Gallagher & Co., a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. Gallagher provides services in approximately 130 countries around the world througowned operations and a network of correspondent brokers and consultants.

Hyperion Partners Joins MAI Capital Management

MAI Capital Management LLC, a registered investment adviser specializing in investment and financial planning for high-net-worth individuals and families, announced the acquisition of Hyperion Partners.

Hyperion is an advisory firm primarily serving businesses and high-net-worth individuals. Founded by Jeffrey Leber and Vaughn Schill in 2018, the firm had $528.8 million in client assets under management as of September 30.

“Jeff, Vaughn, and the full Hyperion team provide high quality service and advice for their clients across a wide net of capabilities from tax and estate planning to business strategies,” Patrick Gingras, market leader and regional president at MAI, said in a statement. “We look forward to providing them with our full suite of resources and support so they can continue to enhance and grow their business.”

Hyperion will adopt MAI’s brand identity, HR, operations and marketing resources. As part of MAI, Leber and Schill will both take on the title of regional president.

Modern Wealth Management Acquires RIA Petso Financial

Modern Wealth Management LLC, a registered investment advisory firm founded to meet the evolving needs of financial professionals and their clients, announced the acquisition of Boise, Idaho-based Petso Financial Consultants LLC, a fee-only financial advisory firm with approximately $1.4 billion in assets under management.

This transaction is Modern Wealth’s 11th acquisition to date and its sixth of the year, bringing its total AUM to more than $6 billion.

Founded in 2001 by David Petso, Petso Financial provides holistic wealth management and financial planning services. Petso Financial’s client experience includes investment management, financial planning, estate planning and retirement income planning for both individuals and corporate clients.

“Joining Modern Wealth presented a unique opportunity that aligned well with Petso’s rapid client growth,” said Petso, who joins Modern Wealth as a managing director, said in a statement. “It wasn’t about stepping into a plug-and-play firm; it was about joining a dynamic, fast-growing team where we could be an integral part of the journey.”

Waverly Advisors Acquires 9258 Wealth Management

Waverly Advisors LLC, a federally registered investment adviser specializing in investment management, financial planning and wealth management solutions for high-net-worth individuals, corporate retirement plans and institutional clients, has acquired 9258 Wealth Management LLC, an investment advisory firm and tax preparation and planning business headquartered in Cincinnati.

The partnership adds three Ohio-based office locations to Waverly’s growing footprint and $1 billion in assets under management.

Walt Lunsford founded 9258 in 2017 and, prior to that, spent 13 years as a managing director and senior vice president at a multinational financial services company. He is the president and sole owner of the firm and brings a team of 24 professionals to Waverly. Walt will serve as a partner, wealth adviser and regional director at Waverly.

“Partnering with 9258 brings a wealth of benefits to both firms,” Justin Russell, president of Waverly, said in a statement. “Not only do we expand our reach into another new market, but we acquire new lines of service and expertise, while providing greater resources and infrastructure to 9258’s existing clients.”

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