401k Plan Fees are only Part of the Equation. At the conclusion of a TPSU Fiduciary Education Program, there was an in-depth conversation between Fred Barstein, Founder and CEO of The Plan Sponsor University and Adjunct Lecturer Tim Dougherty. The TPSU Program which was held at LaSalle University concentrated on Behavioral Finance, Improving Plan Outcomes and the analysis of 401k Plan Fees.
Recent regulatory changes and legal cases are fostering an environment of awareness of retirement plan-related fees. Fees have always been a part of the industry; however, the astute Retirement Plan Sponsor is now beginning to measure plan outcomes and the overall value of a plan to participants.
The strong focus on 401k Plan Fees began around 2012 and scrutiny has been increasing ever since. That increased focus on fees has led to the growth of indexed and passive funds, which tend to have lower fees than active investments.
Plan sponsors must weigh the needs of the company and their employees when selecting providers, advisors, and investments. While it is prudent and required to make sure that fees are reasonable, attempting to do so without factoring in the value received is irresponsible. Remember, neither in the law nor in regulation, is a plan sponsor required to have the cheapest plan or the lowest cost investments.
