More and more plan sponsors are starting to understand their fiduciary duty and their duty to pay only reasonable plan expenses. That also means that there will be plan providers out there who will try to take advantage of the situation by selling services to “help” the plan sponsor review their fiduciary duty with over inflated fees.
I heard of a retirement plan provider that is providing a benchmarking service and a review of the financial advisor’s work. They will benchmark fees, review the investment policy statement, and review plan investments. They won’t serve in any fiduciary capacity and they will do all that work for almost $4,000. It seems to be a lot to me just to benchmark fees and review the fiduciary process in the plan without serving as a plan fiduciary especially when the financial advisor could use an independent benchmarking service like Brightscope, fi360, and Fiduciary Benchmarks for a lot less than $4,000. It’s also a lot of money when I realized that the financial advisor was only making $12,000 on a $6 million plan.
Plan sponsors should understand their fiduciary duty and their duty to pay only reasonable plan expenses, but they need to ask around whether a provider’s work deserves what I thought was an inflated fee.
Everyone has to make a living and I’m sure that there will be more plan providers out there who will try to make a lot of bucks for doing a lot of nothing and a little something.