Retirement plan fees are complicated. Between administration, investment management, recordkeeping, consulting, revenue sharing, sub-TA and 12b-1, it isn’t always clear to plan sponsors exactly how much they’re paying, who’s paying or even who’s getting paid. ERISA Section 408(b)(2) states that plan fiduciaries must determine whether the agreements and compensation of service providers are “reasonable.” Best practices dictate that plan fiduciaries go through a prudent, comprehensive and measurable process of monitoring and documentation to ensure that only reasonable fees are being paid.

Most “Benchmarking” reports today simply compare a plan’s demographics against the averages of similar sized plans, which does not drive improvements. Our Benchmarking analysis uses actual proposals, or “live bids,” based on the plan’s specific demographics. This allows us to identify areas that may be improved, such as:

  • Administration Fees:  How do they compare to other providers in the market.
  • Investment performance:  How is it relative to peers, and are there better performing/lower cost alternatives.
  • Services:  What services are being provided, and could they be improved or provided at a lower cost.
wealth advisory group
wealth advisory group

Below is an overview of a benchmarking study we did for a retirement plan with $2MM in assets. The Plan Sponsor was unclear if the fees were reasonable, as an independent benchmarking had not been done recently. They had relied on the incumbent advisor and recordkeeper for oversight of fees and fund performance but realized a review was overdue.

The Results

  • We benchmarked the incumbent provider against nine leading providers and narrowed it down to six providers.
  • Each potential provider was willing to provide the same or more services at a significantly lower cost.
  • The fund lineup was improved with better performing, lower cost funds, and advisor compensation was lowered.
  • The plan sponsor was successful in improving the plan, while also fulfilling their fiduciary responsibility.
wealth advisory group

Let us help you benchmark your plan, today!

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