The U.S. Department of Labor’s 408(b)(2) regulations require “service providers” to ERISA covered plans to provide the responsible plan fiduciary with the information the responsible plan fiduciary needs to make informed decisions when choosing which services providers to hire for the ERISA plan. Specifically, 408(b)(2) requires investment advisers who provide advisory services to ERISA covered plans to disclose in writing the investment adviser’s fiduciary status, the services to be provided by the investment adviser, and a description of all direct and indirect compensation that will be received by the investment adviser.
Currently, there are no specific format requirements for these disclosures and these disclosures can be made in multiple documents (for example, in the service agreement between the Plan and the investment adviser and in the investment adviser’s Form ADV Part 2A Disclosure Brochure). However, if multiple documents are used to make the required 408(b)(2) disclosures, it is recommended that the investment adviser provide a guide or a summary to notify the responsible plan fiduciary of the particular location of the 408(b)(2) disclosures (in other words, a guide to provide the document name and page number where the 408(b)(2) disclosures are made).
If you would like more information and guidance about the 408(b)(2) regulations, on Thursday, May 10, 2012, at 12:00 CDT, our affiliated law firm, Bryan Hill Attorney at Law, will be conducting a webinar, New 408(b)(2) Disclosure Requirements Affect Investment Advisers to ERISA Plan Accounts. To register for this webinar, click here.