One of the keys to being a great plan sponsor fiduciary is ensuring that the fees you pay in your plan are reasonable. How do you determine what’s reasonable, though?
Under ERISA, the only way is to benchmark them against the marketplace. Think of all the people you’re paying for plan-related services—you’ve got a record keeper, investment managers, a plan advisor, perhaps a third-party administrator, etc. You need to understand who these service providers are and what you’re paying for those services. You also need to know who’s acting as a fiduciary and whether there are any conflicts of interest.
We’ve found that the best way to determine whether your plan fees are reasonable is to benchmark it against other similar-size plans, record keepers, and advisors. This can be complicated, though, because you need accurate data from these service providers for this to work, and sometimes service providers don’t make it easy to determine their fees.
At Baystate Financial, we have a very simple benchmark analysis service we’d like to offer you free of charge to help you determine whether your fees are reasonable. We look at the universal retirement plans that have similar characteristics to yours (plan size, number of employees, investments and any other data, etc.) and pull data from other plans across the country in order to create a benchmark report just for you.
If you’d like to know more about getting your own free benchmark analysis or you have any other retirement-related questions, don’t hesitate to call or email us or visit our website Retirementcfo.com. Just click on the “Contact Me” tab at the bottom of the screen and follow the prompts. We’d be happy to help.