The Aug. 30 retirement plan participant fee disclosure deadlinewill come and go with nary a blip on the radar screen, but comeNov. 14, when plan sponsors must release their first quarterlyupdate, the phones could start ringing off the hook.

The disclosures due by the end of August will only add a coupleof columns to a plan participant's usual disclosure documents. Butthe Nov. 14 deadline will give them actual dollars and centsthey've spent on fees, says Dan Weeks, founder, COO and executivevice president of plan sponsor solutions for San Diego-basedBrightScope.

The problem with the participant-level fee disclosure is that“nothing in the regulation forces anyone to put anything in contextfor the participants,” he says. The first disclosure planparticipants receive will look much like the prospectuses they nowreceive in the mail so they will “go over their heads.”

Big plan sponsors, who did their fee disclosure workproactively, have been surprised because they haven't received alot of calls about them, Weeks explains, “But it isn't personalyet. It becomes personal with the quarterly statement. They couldfind out they paid as much in fees as they got in return for theirfunds.”

A recent report by AARP shows that the majority of people don'tbelieve they are paying fees on their 401(k) plans.

“That's where it gets personal. Right now, it is too much like aprospectus update,” Weeks says.

BrightScope's founders believe transparency in the industry wasmuch needed. The whole premise of the company was to help peoplecompare their financial advisors and their retirement plans.

People can go on the BrightScope website, for free, and uploadtheir actual annual fee disclosure document. They can then comparethose fees to the fees of other plans their size in a handy,color-coded system that also allows them to compare their plan feesagainst other rated plans. BrightScope's site already includes feeestimates from most major companies. It updates its fee estimatesbased on the actual figures that clients upload into thesystem. 

“I think plan sponsors might assume that fee disclosure is notthe issue they thought it was because what is happening in theshort-term is not interesting,” Weeks says. “The quarterly is whereit gets interesting.”

Laurie Nordquist, executive vice president and director of WellsFargo's Institutional Retirement business, agrees with Weeks thatparticipant disclosure has been a bit of a non-event. The companyhas seen very little increase in the volume of calls in the callcenter.

“We did see a spike when we sent out a notice to all employeeswho were not participating in the plan,” she says.

Instead of just sending out fee disclosures, Wells Fargo added amessage directed to employees who are not participating in theirretirement plan letting them know what they are missing out on,including an employer match, which is free money to them.

“We did see an increase in calls from those employees and wewere encouraged by that,” Nordquist says.

Nordquist believes that companies that are not taking advantageof the fee disclosure mailing to try and get employees toparticipate or participate more are missing out on a realopportunity.

Participants are notorious for receiving prospectus mailings andputting them directly into the trash, without reading them. If feedisclosures look like a prospectus, they won't be read, shesays.

Wells Fargo, like most large retirement plan providers, did allthe heavy lifting for its plan sponsor clients when it came toparticipant fee disclosure.

Wells Fargo's quarterly statement goes out in October.

“We're not anticipating much of a spike in October, but we willcertainly be ready for it when the calls come in,” Nordquistsays.

Guardian Life Insurance also believes both the 408(b)(2) andparticipant-level fee disclosures have been uneventful.

Jason Frain, vice president of 401(k) product management anddevelopment for Guardian Life Insurance, believes that part of thereason too much hasn't happened with plan sponsors regarding the408(b)(2) regulations is because they have been  reallyfocused on getting out their Aug. 30 participant-leveldisclosures. 

Once they get through this month's disclosure and the Nov. 14disclosure, then they'll begin the long road of benchmarking theirplan provider's fees to see if they're paying too much or justenough for the services being provided.

“Down the line, we will see a broader review of plans, wherethey are going out and evaluating their fees and doingbenchmarking,” Frain says. “The participant-level disclosureshaven't heated up yet. Most haven't seen them yet, but there hasnot been a huge uptick in calls or questions at this point.”

He adds that when participants get their quarterly statements,that will be the thing that opens their eyes for the first time.Guardian historically has included fee disclosures on itsstatements, but now they will be more clear and transparent and ina format that is easier to understand.

“We're likely to see an additional volume of questions fromparticipants in that time frame,” he says. That's why Guardian wasproactive and built a fee disclosure microsite to help participantsunderstand who the people are that are involved in their 401(k)plans and what their plan fees are paying for.

 “I think [fee disclosure] is a good thing. Anytimeplan sponsors/participants can get a better understanding of whatthey are being paid, I think it is good. What is most importantthough is that plan sponsors and plan participants realize whatservices or value they are receiving for those fees,” Frain says.“As plans do ultimately go out to benchmark or go out to bid, theyhave to understand what is being delivered to them today. Not allsolutions out there are on an apples-to-apples basis.”

The one problem with fee disclosure statements is that theydon't compensate for higher fees translating into higher returns.They are just bottom line fees, Weeks says.  The averageperson doesn't understand bonds versus stock or active versusindex. Because index funds have lower fees, there will be a shiftto those because fees look like taxes, he adds.

“What they don't know is that this tax is well worth it,” Weekssays.