Two significant enhancements that provide even greater insights into the world of 401(k) plan fees—added as a direct result of user feedback—highlight the updates in the 24th Edition of the 401k Averages Book, released today by Baltimore, Md.-based Pension Data Source, Inc.
The first major enhancement is the introduction of new benchmarking data focused on advisor compensation. Recognizing the importance of advisor contributions in shaping the success of 401(k) plans, the latest edition now includes data on advisor compensation. This addition enables plan sponsors and advisors to make informed decisions, aligning their strategies with industry standards, says Joseph W. Valletta, author of the 401k Averages Book.
The second enhancement is the expanded definition of recordkeeping administration. Responding to the evolving landscape of retirement plan administration, Valletta said he has broadened the scope to include hard dollar fees, asset-based fees and any allocation from revenue sharing. The expansion allows for a more nuanced understanding of the cost structures associated with 401(k) plan recordkeeping and administration.
Valletta told 401(k) Specialist the new edition introduces an updated layout along with expanded fee information.
“While readers will encounter familiar sections and charts they’ve come to rely on, they’ll also discover new visuals aimed at enriching the book’s depth and utility. Importantly, we’ve retained the three user-friendly infographics spotlighting small plan costs, including a highly regarded segment illustrating the 5-year trend of total plan costs tailored to plan size,” Valletta said. “We anticipate that the new charts in the book, which delve into Net Investment, Advisor Compensation, and Recordkeeping Administration—encompassing hard dollar fees, asset-based fees, and any allocations from revenue sharing—will quickly become a go-to resource for advisors seeking to benchmark these specific component costs.”
Key findings from new edition
- Advisor Compensation declines as plan assets increase: Advisor compensation, as a percentage of assets, for a small plan with $5,000,000 in assets equals 0.37%, while a plan with $50,000,000 in assets is 0.17%.
- Recordkeeping Administration definition change: Hard dollar only recordkeeping fees for a small retirement plan (100 participants/$5,000,000 assets) in the 23rd Edition averaged $47 per participant compared to the 24th Edition’s expanded definition including hard dollar fees, asset-based fees and any allocation from revenue sharing of $165 per participant.
- Plans with smaller average account balances pay more than those with larger balances: A $20,000,000 plan with 2,000 participants has an average total plan cost of 1.26%, while a $20,000,000 plan with 200 participants has an average total plan cost of 0.84%.
The book includes 24 sections with charts detailing average 401(k) fees for plans with 10, 25, 50, 100, 200, 500, 1,000 and 2,000 participants.
Published since 1995, Valletta says the 401k Averages Book is the only resource book available for non-biased, comparative 401(k) average cost information. It’s designed to provide financial professionals with essential 401(k) cost information needed to determine if their 401(k) plan costs are above or below average. The 24th Edition of the 401k Averages Book is available for $95 and can be purchased at www.401ksource.com or by calling (888) 401-3089.
SEE ALSO:
• 401(k) Plan Fees Declining, But Small Plans Still Pay More
• Benchmark Survey on Recordkeeping Fees for Large DC Plans Debuts