Let’s talk retirement plan fees and maybe more importantly the structure of these fees. If you work in this industry you are probably aware that the bulk of these fees are typically attached to the plan assets in some way or another. This means that plan participants are paying for the lion’s share (if not all) of the services provided to the plan. Is this right? Is there a better way?
There is another way to set these things up. We can work to shift the fees from being paid by the hardworking employees to being paid for by the Employer. This approach makes perfect sense if you stop and think about it. First of all, it turns these fees into a business expense, which is a good thing. It also puts a halt to participants paying different amounts for the same services and alleviates the problems that arise when a participant is paying for services that they don’t need or use.
One other MAJOR thing, an approach that shifts the plan costs from the participant to the Employer would reduce a Plan Sponsors liability in a massive way!
After 408b2, 404a5 and now the New Fiduciary Rules, why is this prudent and fair approach not more widely utilized? I will tell you why…..cause it takes a Plan Advisor with some “balls” to discuss and implement with a client/prospect, Female Plan Advisors can grow a pair too…this is just an metaphor. 🙂
This is not the “path of least resistance” and this is not the “easy sell.” Many times in life doing the right thing sometimes takes courage and can be difficult, this is one of those times. An Advisor has to have the conversation with the Plan Sponsor and explain why having the Employer pay for these costs is the right thing to do.
I truly believe that with the right planning and preparation an Advisor can utilize this approach to stand out from the “less courageous” Advisors and win new business by showing their Prospects that they care about the bigger picture, want to do the right thing and truly act in the best interest of all involved.
Don’t Be a Wuss! 🙂
One response to “401(k) Fees and Courageous Advisors”
[…] much so that I recently wrote a blog post about shifting costs from the employees to the employer (click here to read the post). I also believe that Vendors and Advisors should not “over-charge” for their services. […]