Anything that increases fee transparency should be a good thing. Granted, they have a dog in the hunt, but with that in mind low-cost 401(k) provider Employee Fiduciary released its database of 401k fee comparisons compiled from live data over the last twelve months. The database “lifts the lid on the overly complex and often misleading 401k fees charged to small business retirement plans,” according to the company.
The database identifies plan providers by name and provides searchable data that allow plan sponsors to compare and benchmark their current plan fees and is sorted by service provider. After choosing a provider, a visitor can search comparisons based on plan assets and participant count. Visitors can also request a custom fee comparison for their 401k plan by submitting their service provider’s “408(b)-2” disclosure document and a current statement of assets.
“We’ve been doing these fee comparisons for a year now,” Eric Droblyen, COO and president of Employee Fiduciary, said in a statement. “We felt that sharing the data on a new web-page would be invaluable to 401k sponsors when evaluating service providers. It will also give them an opportunity to benchmark their current fees and better evaluate alternatives.”
He added that to his knowledge, this is the first time a company has provided detailed information to the public at no cost.
“Too many 401k fees do not appear on plan sponsor invoices or participant benefit statements. These hidden fees can be easily undervalued since they’re not transparent. Since both transparent and hidden fees reduce participant returns, they are equally important. We want 401k stakeholders to know the total cost of their plan so they can make plan decisions accordingly.”
The comparison service was originally created as a response to what the company felt was insufficient Department of Labor (DOL) fee disclosure regulations.
“Because the DOL did not mandate a standard disclosure format, many providers used their discretion to effectively bury 401k fees in pages of dense language,” Droblyen concluded. “Plan fiduciaries are unable to sort out the fees they are paying. Our service is a direct response to overcoming the inadequacies of the current regulations.”