Understanding and uncovering all of the fees and commissions that the employer or plan participants pay for each plan service can be complicated and confusing.
Our benchmarking helps plan sponsors discover and evaluate provider fees so that they pay only fair market value for the services received. We will
- Identify all current service providers’ fees and commissions (including investment expenses) and benchmark against similar alternatives
- Discuss benchmarking analysis including who is paying the fees and how, and determine fiduciary strategies to mitigate risk(s)
- Conduct fee re-negotiations with incumbent or support replacement provider RFP as appropriate
- Implement desired changes and provide monitoring and periodic benchmarking of providers
ERISA holds employers to a high standard of care and diligence to discharge their duties solely in the interest of the plan participants and their beneficiaries. Among other things, this means that employers must, “ensure that fees paid to service providers and other expenses of the plan are reasonable in light of the level and quality of services provided.” High fees and expenses paid by the plan (i.e., the plan’s participants) may substantially reduce the growth of participant accounts which will reduce their retirement income. High fees also subject plan sponsors to fiduciary risk.
There’s an art to finding hidden costs.
The Retirement Services Team at Beltz Ianni & Associates has unparalleled knowledge when it comes to identifying all plan fees, commissions and expenses, and uncovering who is paid and how much. Our individuals have backgrounds in recordkeeping and third-party administration, and in designing and pricing retirement plan services. Their experience with mutual fund managers, custodians, record keepers, brokers, advisors, payroll companies and insurance companies makes them extremely adept at finding the costs that others might miss.
Our benchmarking of retirement plans leads us to believe that approximately 1 in every three plans is paying more than necessary for the services provided. And, where higher than average fees are paid, they can be 30% to upwards of 50% higher than what they should be*.
Consider the following Department of Labor example: Assume an employee with 35 years until retirement and a current 401(k) account balance of $25,000. If returns on investments in the account over the next 35 years average 7% and fees and expenses reduce the average returns by 0.5%, the account balance will grow to $227,000 at retirement, even if there are no further contributions to the account. If fees and expenses are 1.5%, however, the account balance will grow to only $163,000. The 1% difference in fees and expenses would reduce the employee’s account balance at retirement by 28%.
*Includes an analysis of investment expenses as well as recordkeeping and other costs.