What makes a fee reasonable or unreasonable? As we all know, there is no definitive guidance provided by ERISA and the Department of Labor. Instead, we are left to make the determination based upon the facts and circumstances at hand.
As many of you are aware, FRA PlanTools offers a Benchmarking Report through its web based PlanTools Risk Management System. The report benchmarks the fees paid by a retirement plan for the services rendered against other plans of similar size by plan assets or participant count using a proprietary, independent and objective database. (We also are about to roll out a new iPad APP called PLANbenchmark to be debuted at the CFDD Conference in San Antonio in October. More on that in a later post.)
As a service to the industry for the purpose of starting or continuing the conversation about fees, we are publishing our internal data for the 95th percentile of fees entered into our system for (1) Investment Advisory Services, (2) Investment Management Fees, and (3) Recordkeeping Fees. What this means is that 95% of the retirement plans in our system pay at or less than the amounts found in the charts below.
The data was pulled from our system on June 30, 2013. As a lead up to the CFDD Conference, we intend to publish Part 2 – Investment Manage Fees next Thursday, September 26, and Part 3 – Recordkeeping Fees on October 3. If we receive positive feedback, we intend to update these charts on a quarterly or semi-annual basis.
Click here to download the infographic in PDF form: FRA PlanTools – Are These Fees Unreasonable – Part 1 — Advisory Services.