Fee Benchmarking

What does the DOL say about 401(k) Fees?

“When you consider the fees in your 401(k) plan and their impact on your retirement income, remember that all services have costs. If your employer has selected a bundled program of services and investments, compare all services received with the total cost. Remember, too, that higher investment management fees do not necessarily mean better performance. Nor is cheaper necessarily better. Compare the net returns relative to the risks among available investment options. And, finally, don’t consider fees in a vacuum. They are only one part of the bigger picture including investment risk and returns and the extent and quality of services provider.”

Source: A Look at 401(k) Plan Fees, U.S. Department of Labor, October 2010

What does ERISA say about “reasonable fees”?

The Employee Retirement Income Security Act (ERISA) REQUIRES fiduciaries to make sure they pay only reasonable expenses to all service providers and investment managers. BUT…per the Department of Labor’s booklet on 401(k) Plan Fees: “don’t consider fees in a vacuum. They are only one part of the bigger picture including investment risk and returns and the extent and quality of services provided.”

How many times does the 408(b)(2) regulation touch on reasonableness?

The words “Reasonable” or “Reasonableness are referenced 49 times in the regulation.

Value and Fee Benchmarking is the industry’s most advanced and value focused benchmarking service. It transitions the conversation away from “what am I paying?” to “Is what I am paying reasonable for the services, value and success that my plan and participants are achieving?”.

Fiduciary Benchmarks Insights, LLC, www.fiduciarybenchmarks.com, is a strategic resource that provides the Value and Fee Benchmarking report.

Baystate Fiduciary Advisors is not affiliated with Fiduciary Benchmarks Insights, LLC.