They’re headed in the right direction, so any reduction, however small, will do.
The latest edition of the 401k Averages Book finds the average total plan cost for a small retirement plan (defined and 100 participants and/or $5,000,000 assets) declined from 1.29 percent to 1.28 percent over the past year. The average total plan cost for a large retirement plan (1,000 participants and/or $50,000,000 assets) declined to under 100 basis points, from 1.03 percent to 0.97 percent.
“On average 401(k) investment fees continue to decline in both the small and large plan market,” David Huntley, co-author of the 401k Averages Book, said in a statement.
The average investment cost for a small retirement plan declined from 1.22 percent to 1.21 percent over the past year, while the average investment cost for a large retirement plan declined from 1.01 percent to 0.95 percent.
Understand Revenue Sharing
Huntly notes the continued uptick in 401(k) lawsuits, with some targeting revenue sharing as well as other fiduciary issues.
“Revenue sharing is not necessarily bad; it’s when a sponsor does not know how much revenue sharing is generated, how it’s used or compares that might cause issues,” added colleague Joseph Valletta.
Small plan generates 0.66 percent of revenue sharing, while a large plan generates 0.40 percent.
Plan Fees on the Decline since 2010
“401k fees have been trending down for years and plan participants have benefited because of it,” Huntley said.
Average total plan cost for a 100 participant plan has decreased from 1.33 percent in 2010 to 1.28 percent in 2015.
“We think infographics are a great way for advisors to inform their clients and this one is very interesting,” he concluded.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
