Encore Fiduciary—formerly known as Euclid Fiduciary—has developed the first publicly available national database that provides reliable evidence of what large plans really pay for recordkeeping services.
Why is this important? Encore Fiduciary claims that given the lack of a reliable benchmark for what large plans pay for recordkeeping services, plaintiff law firms have filled the void with misleading comparators to support a recent wave of fiduciary malpractice claims.
“Contrary to the premise of most excess fee cases that large plan fiduciaries are ‘asleep at the wheel’ and overpay recordkeepers, the survey shows that most large plans have used their size leverage to benefit plan participants.”
According to a companion white paper, the results of the recordkeeping survey demonstrate that while large plans pay significantly less than small plans under $100m in assets, large plans still pay significantly more than the purported fiduciary malpractice lawsuits are alleging. “Under the Encore recordkeeping database, most excess recordkeeping fee claims lack credibility and should be dismissed,” the white paper states. “Contrary to the premise of most excess fee cases that large plan fiduciaries are ‘asleep at the wheel’ and overpay recordkeepers, the survey shows that most large plans have used their size leverage to benefit plan participants.”
Encore Fiduciary, a division of Specialty Program Group LLC (SPG), on Jan. 23 announced the release of the resource and risk management tool for large defined contribution plan fiduciaries: The Encore Fiduciary Large-Plan Recordkeeping Benchmark Survey. Authored by Daniel Aronowitz, President of Encore Fiduciary, this study accompanied by a detailed white paper, offers a comprehensive benchmark of the recordkeeping fees paid by sponsors of large defined contribution benefit plans.
This survey, which draws on data from over 2,500 large plans with assets exceeding $100 million, and over 1,000 participants for the years 2020, 2021, and 2022, seeks to provide clarity and understanding in the complex landscape of recordkeeping fees. It’s a valuable tool for plan sponsors, enabling them to make informed decisions and understand the appropriate costs associated with recordkeeping services.
“Our survey offers an unprecedented level of insight and perspective in an area that has been a source of litigation risk for many plan sponsors,” Aronowitz said. “Our objective was to empower plan sponsors with the knowledge to make better fiduciary decisions and navigate the often-challenging terrain of fiduciary responsibilities. We also wanted to lower litigation risk for plan sponsors by providing a reliable benchmark that validates the cost of plan administration and recordkeeping for large defined contribution plans.”
The survey is more than just a response to the wave of fiduciary imprudence lawsuits seen in recent years. The Encore recordkeeping benchmark provides concrete, reliable data for plans fiduciaries to understand what similarly sized plans are paying for recordkeeping services. This allows plans sponsors to meet fiduciary obligations to act in the best interests of their plan participants.
“This recordkeeping survey is a testament to Encore Fiduciary’s commitment to serving as thought leaders and advocates in the fiduciary space. We are not just providing data; we are offering insights and guidance to help plan sponsors safeguard their interests and those of their participants,” said Christopher Treanor, President and CEO of SPG.
• Download Encore Fiduciary’s Benchmark Survey.
Key survey findings
• Fee compression for large-plan recordkeeping continues. Fees continue to decline over the last five years and have continued to decline from 2020-2022.
• The vast majority of plans with over $500m in assets have a per-participant recordkeeping fee [as opposed to a percentage of asset charge] with revenue sharing eliminated or minimal; and most revenue sharing is credited back to the plan or plan participants.
• Plans under $250m continue to use revenue sharing as the primary method of paying recordkeeping fees, but the percentage of plans without revenue sharing continues to decline as large plans move to fixed per-participant recordkeeping fees.
• The vast majority of large plans over $250m in assets in America pay substantially less than plans with less than $100 in assets. This is largely because most small plans in America have a recordkeeping arrangement in which they pay for plan administration services on a percentage-of-asset basis or through revenue sharing from investment options in the plan.
• Very few plan sponsors of large plans pay recordkeeping fees on behalf of plan participants.
• Approximately one in 25 large plan sponsors pay the recordkeeping fee. Approximately 10% of plans charge additional plan costs to participants in addition to recordkeeping fees.
• Plans that offer the QDIA with the recordkeeper received a lower recordkeeping fee than plans with investments sponsored by another company.
• The premise of the vast majority of excess fee cases purporting to claim that most large $500m+ asset plans pay $25 or even $35 or less per participant is false.
Euclid Fiduciary rebranded to Encore Fiduciary
Euclid Fiduciary also announced Jan. 23 a significant milestone: the company is now rebranded as Encore Fiduciary. The rebranding represents an evolution in the company’s vision and commitment in the fiduciary management sector, says a press release announcing the name change. Encore’s new identity is not only a symbol of change but also a testament to growth and expansion, a result of the partnership with Specialty Program Group (SPG).
This strategic alliance with SPG provides Encore with a range of resources and opportunities, enabling it to expand its services and market influence.
While embracing this new chapter, Encore Fiduciary assures its clients and partners that its core values and dedication to providing expert solutions will remain unchanged. The transition to Encore brings with it a reinforcement of these values, now coupled with greater opportunities for innovation and service excellence. The rebranding reflects a commitment to maintain the essence of what has always defined the company, while opening new avenues for growth and success. To learn more visit encorefiduciary.com/euclid-is-now-encore/
SEE ALSO:
• 7 Key Takeaways from 2023 Excess Fee and Performance Litigation
• Most ERISA Excessive Fee Cases Surviving Motions to Dismiss
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
