Advocating for Transparency
At BrightScope we are absolutely committed to bringing an increased level of transparency to the 401k market. We believe that transparency will restore confidence in the 401k system and benefit all of the participants who rely upon 401k plans for a portion of their retirement income. In that spirit, we mailed a letter this week to Attorney General Eric Holder requesting that he take the lead on improving the Freedom of Information Act (FOIA) and making more data available to the public in a timely manner. The impetus for the letter was Obama’s memorandum on transparency that we blogged about last month.
In the letter we propose numerous improvements to the FOIA process which I will summarize here:
- Facilitate Adoption of Extensible Business Reporting Language (XBRL) for Business Data
- Encourage Quick Turnaround of Disclosure Data
- Expand Use of Electronic Submissions
- Expand Use of Electronic Reading Rooms
- Establish a Public FOIA Advisory Committee
To download a PDF of the letter please click the image below:
BrightScope Letter to the US Attorney General
BrightScope Letter to the US Attorney General
Transparency is important and improving it will make our system better, but transparency doesn’t help ordinary citizens and citizen-fiduciaries much; what it does is allow those who know what to look for to find it more easily. The reality is that full transparency in the hands of an amateur fiduciary probably helps very little. Transparency in the hands of professional fiduciaries, on the other hand, might help with the real issue–transformation of the system to where sound, thorough, effective governance is the rule rather than the exception. So transparency regulation and legislation is necessary, but not the answer–there’s another, bigger step implied, which is to put the nation’s retirement system in the hands of professional fiduciaries. Not in the hands of government (professional plunderers when it comes to big pots of money lying around–The State is the worst financial fiduciary on the planet), but in the hands of independent fiduciaries. Many ways to approach that concept, but Greg Kasten (my boss) has a simple one–require any service provider to a retirement plan to be a fiduciary. Might ruffle some feathers, but a good feather-ruffling might be just the thing.
Pete -
I agree with much of what you said. I think that professional independent fiduciaries are a great resource. I also agree that more service providers should take on fiduciary responsibility if they are going to work with retirement plans. However I disagree that transparency doesn’t help ordinary citizens. I think that ordinary citizens are the primary benefits of transparency. Transparency helps align a plan sponsor’s incentives with their participants/ beneficiaries. I think that there is a groundswell of interest in the transparency movement in financial markets and will be blogging about this more in the future.
By the way Pete do you have a blog?
Cheers,
Ryan