Mutual Funds and Defined Contribution Plans: Can Transparency in Fee Disclosure Alleviate the Modern Dual-Agency Problem?

• In Event: Public Interest / Experimental I

Abstract

In 2012, the U.S. Department of Labor issued regulations to improve transparency of investment fees and expenses charged to worker retirement plan accounts. Before then, defined contribution plan participants did receive complete risk, return, and fee information to make informed decisions about retirement investments. This paper places the recently enacted U.S. Department of Labor fee disclosure regulations in historical context, evaluates the disclosures using behavioral and information economics, and draws parallels to the fair and full disclosure regulation of the 1933 and 1934 Securities Acts. Ultimately, this paper finds these disclosures to be necessary but insufficient, given lack of plan participant financial literacy.

Author

• Aleksandra Brikman, Case Western Reserve University