Provider Service and Fee Benchmarking
Understanding and uncovering all of the fees and commissions that the employer or plan participants pay for each plan service can be complicated and confusing.
Our benchmarking helps plan sponsors discover and evaluate provider fees so that they pay only fair market value for the services received.
We will :
- Identify all current service providers’ fees and commissions (including investment expenses) and benchmark against similar alternatives
- Discuss benchmarking analysis including who is paying the fees and how, and determine fiduciary strategies to manage risk(s)
- Assist plan sponsor with conducting fee re-negotiations with incumbent or support replacement provider RFP as appropriate
- Implement desired changes and provide monitoring and periodic benchmarking of providers
There’s an art to finding hidden costs.
The Retirement Services Team at Modern Wealth Management has comprehensive knowledge when it comes to identifying all plan fees, commissions and expenses, and uncovering who is paid and how much. Our individuals have backgrounds in record keeping and third-party administration, and in designing and pricing retirement plan services. Their experience with mutual fund managers, custodians, record keepers, brokers, advisors, payroll companies and insurance companies makes them extremely adept at finding the costs that others might miss.
Consider the following Department of Labor example: Assume an employee with 35 years until retirement and a current 401(k) account balance of $25,000. If returns on investments in the account over the next 35 years average 7% and fees and expenses reduce the average returns by 0.5%, the account balance will grow to $227,000 at retirement, even if there are no further contributions to the account. If fees and expenses are 1.5%, however, the account balance will grow to only $163,000. The 1% difference in fees and expenses would reduce the employee’s account balance at retirement by 28%. (Source: Department of Labor publication “A Look at 401(k) Plan Fees”).