Recently, most plan sponsors were forced to make a decision about keeping a particular fixed income fund in their line-up that many participants feel is the anchor to their 401(k) plan investment strategy. When Bill Gross left PIMCO, plan sponsors needed to consider whether PIMCO’s flagship Total Return Fund should remain part of their investment menus. Many observers have used this situation to outline the benefits of white-labeling 401(k) plan investment funds. I don’t believe that white-labeling makes sense, for the following reasons:
- Transparency. The process of white-labeling obscures the true identity of the funds that underlie a particular asset class. Proponents of white-labeling believe that if participants don’t know what the fund is and who is managing it they will invest with more integrity based on their overall investment strategy. Unfortunately, white-labeling flies in the face of the overall movement in retirement plans towards transparency. Don’t participants have a right to know what fund they are investing in and shouldn’t that be a major consideration in determining whether they invest in it?
