Last month, I discussed what committees need to do to review the various fee disclosures in an effort to understand and communicate them to participants. Plan sponsors are now in full swing in getting them sent to participants. The question is, with all the effort put into fee disclosures and the money to produce them; does it really help the participant in the end? I have asked various participants and committee members over the past couple of years if they read the participant fee disclosures. Without fail, almost all have said they have not read them. Most participants say they look daunting and overwhelming, but know it is information they need. The problem is that if they never read it, are we really helping them? How can we couple the information they need with the drive to do something about it?             

Another disservice the industry has committed is what is reported and focused on in statements. Statements today drive a focus on returns of the various investments they have in the plan and even the ones they don’t. In fact, most statements are also highlighting participant rates of return. Unfortunately, this leads participants to do the very things the industry tells them not to do. They chase returns by either selling or buying at the wrong time. The standard industry disclosure is, “Past performance is not a guarantee of future performance.”

While I realize you cannot change everything overnight, the industry needs to change the messaging to help participants focus on what is important. The driving force behind making the change will be the participant. Do participants really care, or what will encourage them to be reengaged? The even bigger question is, what do we need to do as an industry to drive this, and at what cost?

I think the industry and retirement plan platforms, if not government regulations, are missing a chance to actually help educate participants so they can make better decisions and be better prepared for retirement. I also know only so much information can be included on statements before they become overwhelming.

Statements need to be easy to read and to the point. While we have made some strides in recent years by showing participants what their account balance will translate into in a monthly income, we still have a long way to go. In the end will the participant really care or engage to become better prepared, or will they continue to do the same things as they have in past? It will take not only industry but also changing the way we communicate to change participant habits and drive better outcomes.

The question will be: Who takes the first step, or do we automate everything and take the decisions away from participants? I believe people want to do better, but it has to be easy for them to take the first step. Here is to driving better outcomes.

Ludwig, ChFC, AIF, CRPS, is an LPL Financial advisor with LHD Retirement. He can be reached at

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.

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