401(K) INVESTMENT ISSUES: Department of Labor Focuses on Revenue Practices What Are Your Fiduciary Duties Regarding Revenue-Sharing Arrangements?

The Department of Labor (DOL) Advisory Council Working Group on Fiduciary Responsibilities and Revenue Sharing Practices recently invited members of the benefits community to comment on revenue-sharing practices. Revenue-sharing arrangements vary based on the dollar amount of the investments in a plan. The best way to understand the variance in revenue-sharing arrangements among plans of different sizes is through examples. Disclosure of revenue sharing may not lend itself to a prototype or model. However, the DOL should require that disclosures of revenue-sharing payments be broken out into appropriate and comparable categories, such that plan sponsors can readily compare revenue sharing among providers. The trend toward disclosure and transparency is well under way and is accelerating. Once fiduciaries are regularly receiving the additional information on fees, expenses, and revenue sharing, the expectations for fiduciary prudence will be heightened. Fiduciaries will be expected to review and evaluate the information they receive and to make informed decisions for the benefit of the participants.