BrightScope's Ryan Alfred has posted the latest entry in the ongoing debate between leaders of the transparency movement (where BrightScope is at the head of the class) and the mutual fund industry's Investment Company Institute. For what it's worth, we've contributed our thoughts here, here, and here.
You should read Ryan's post in its entirety, but we think this is the most important thing he wrote:
Exactly right. Though we'll always have a little uncertainty about plans' hidden expenses, it's perfectly straightforward to develop a general sense of which investment vehicles are likely to have higher and lower implicit costs. And it's even more straightforward to understand and disclose the full list of explicit costs facing a plan and its participants.
If we can get individual plans right, in the sense of both transparency and modest expenses, the average/aggregate numbers will take care of themselves. Those aggregate numbers are important, but only to the extent that they reflect the actual experiences of actual participants. And there's still so much variance across plans and participants that there's no substitute for calculating, disclosing, and, where necessary, reducing expenses at the level of individual plans.