Putnam Investments today announced that it will offer transparent and comprehensive disclosure of fees and expenses to participants in the 401(k) plans it administers. The new disclosures will be available online through Putnam’s plan participant Web site later this month, and expand upon the progressive efforts that the firm made in this area earlier this year, when it committed to offering clear, complete disclosure of all fees and expenses to retirement plan sponsors.
The new disclosures will provide participants with full access to real-time information about their total fund expense ratios, any transaction fees associated with their plan that they might possibly incur and other information that will enable them to determine their own individual costs. The disclosures will address all major types of costs related to Putnam-administered retirement plans, including the expense ratio associated with each investment option in the plan, converted into an actual dollar value per $1,000 invested; a list of transactions which participants might make and the transaction fee associated with each; and any fees related to services that employees might incur based on how they use their plan, such as fees for managed accounts or online advice.
The disclosures will also list the services that participants have access to through their plan, including automatic plan features that help them save; informative educational programs; comprehensive, easy-to-read statements; Putnam’s Lifetime Income Analysis Tool, which puts estimated monthly retirement income into context; and a broad range of investment choices that allow participants to build a retirement savings strategy that is right for them.
“We believe that fee transparency is both the right of every plan participant and the obligation of every plan provider,” said Robert L. Reynolds, Putnam’s president and chief executive officer. “At Putnam, we think that clear, useful and wide-ranging information about retirement plan fees and expenses is essential if participants are to understand the value they receive from their plan.
The disclosures will be accompanied by a video tutorial that addresses a number of topics including assessing plan value; the employer’s fiduciary responsibilities as they relate to the value and fees of their plan; and the different types of fees that participants typically incur and an explanation of what each charge is for. The disclosures are intended to provide important context to help participants understand the fee information provided.
“We are pleased to help provide leadership on this issue of such crucial importance for advisors and millions of Americans saving for retirement,” said Edmund F. Murphy, III, Managing Director, Head of Defined Contribution, Putnam Investments. “Participant education is an important component of our fee transparency program. Context is critical for understanding the both the costs and services associated with one’s plan.”
Murphy explained that because every retirement plan provider makes available a different set of capabilities, features and services, only a clear explanation of fees and expenses, aligned with the services available, will enable participants to properly understand the value that their plan provides them. Similarly, he points out, that such transparency will assist sponsors and their intermediaries in identifying the optimal plan for their participants’ specific circumstances, enabling them to help fulfill their responsibilities as fiduciaries under the Employee Retirement Income Security Act (ERISA).
New Levels of Transparency for Plan Sponsors
In May, Putnam announced new disclosures for the plan sponsors that it serves, covering all fees charged: investment management; servicing (including advisory fees); and recordkeeping. Plan sponsors began to see much more than their total investment expense ratio. The new disclosures clearly and simply broke out asset manager revenue from servicing revenue — and show the amounts paid to every investment management firm that offers funds to a retirement plan. They also explicitly identify advisor payments; and disclose specific dollar costs for recordkeeping and plan servicing are disclosed — thereby clearly illustrating the value received by sponsors for each key component of the plan.
For more information on Putnam’s approach to fee transparency in retirement plans, please visit www.theretirementsavingschallenge.com.
Putnam’s Commitment to the Retirement Market
Since Reynolds, a 30-year veteran of the retirement savings industry, became Putnam’s president and chief executive officer in 2008, the company has deepened its commitment to the retirement market and launched a series of innovations and initiatives to meet emerging customer needs. This year, Putnam has launched a series of retirement initiatives, including a Lifetime IncomeSM Analysis Tool for plan participants, and groundbreaking fee transparency disclosures in its effort to provide the clearest, most complete overview of fees and expenses in the workplace savings industry.
Putnam also has expanded the services it offers to 401(k) retirement plans and developed products to meet the needs of those planning for or already in retirement. The firm has created a platform that provides flexible and scalable services and solutions for advisors, consultants, and their plan sponsor clients in every segment of the retirement market.
Putnam RetirementReady® Funds, the firm’s suite of 10 target-date/lifecycle retirement funds, added Absolute Return Funds* to its mix of underlying investments. RetirementReady Funds became the only suite of lifecycle funds to integrate absolute return strategies, which seek positive returns over a period of three years with less volatility than more traditional mutual funds. Employed in retirement portfolios, Putnam Absolute Return Funds are intended to pursue positive returns in up and down markets, to protect against the harmful effects of adverse investment returns, and to reduce volatility, particularly for investors in or near retirement.
About Putnam Investments
Founded in 1937, Putnam Investments is a leading global money management firm with over 70 years of investment experience. The firm was recently named “Mutual Fund Manager of the Year” by Institutional Investor. At the end of September 2010, Putnam had $120 billion in assets under management. Putnam has offices in Boston, London, Frankfurt, Amsterdam, Tokyo, Singapore, and Sydney. For more information, visit putnam.com.
Putnam mutual funds are distributed by Putnam Retail Management.
* Putnam’s target Absolute Return Funds are not intended to outperform stocks and bonds during strong market rallies.