Total Plan Cost Analysis

There is no such thing as a Free Lunch

In order for a 401(k) Plan to remain competitive, fiduciaries should review Plan record-keeping and investment management fees annually. Additionally, every three years it is appropriate to conduct an informal RFI, and every five years, a formal RFP to make sure that the Plan is receiving the best service at the right price. Over the years, we have seen far too many clients that have not considered fees beyond inception of the relationship. This is a mistake, and a breach of fiduciary duty. Our experience gives us the knowledge to know how fees are hidden and how best to negotiate with Plan intermediaries to reduce fees for the Company and the Plan participants.

Fee Check

1. Do you know the total cost of your 401(k) Plan, including fees paid to third-parties, such as: 12b-1, Sub-TA, and the cost of float for your operational accounts?
2. Are you aware of the investment management costs that do not show up in the expense ratio of your Plan’s investments, such as: securities lending fees, brokerage costs, spread costs, liquidity costs and market impact costs?
3. Are you familiar with revenue sharing, and is the Plan the beneficiary of excess revenue sharing over and above the required fees of the service agents to the Plan?
4. Have you taken the Plan out for bid (RFP or RFI) within the past 3-5 years to make sure that the fees paid and services received are still competitive?