Fee Transparency

Fees play an important role in 401(k) plans. Plan sponsors are duty-bound to monitor and benchmark investment selections for fees, performance and appropriateness for plan participants. Plan sponsors can opt to delegate this onerous duty to a third party which is responsible for ensuring that investment choices are in the best interest of the plan participants. It turns out that such a task is easier said than done.

Plain and simple, Plan Sponsors must be able to answer 2 key questions:

  • 1) What is the total "All-In" fee paid by the plan and its participants?
  • 2) Is the amount paid to each provider of services "reasonable"?

As plan fiduciaries, plan sponsors hold the responsibility to know the answer to these questions. However, between the number of services provided to a plan (i.e., recordkeeping, compliance, custodian or insurance annuity contract, and advisory) and the means by which plan costs are collected (i.e., fund expenses, 12b-1 fees, sub-TA fees, and/or direct invoices), answering these two questions can become quite difficult.

Through IFA's unbundled plan structure and clear disclosure, IFA is able to provide complete and total transparency, providing the answer to both questions and simply fulfilling your plan's ERISA obligation. To learn more about the advantages of an unbundled plan, click the link below.