Ever since I graduated school, I have gone to the same car mechanic for the past 16 years. Maybe Ralph is a couple of dollars more than someone else, but he\u2019s always honest. He\u2019s the type of businessman who shows that trust and good work is its own reward when you have such loyal customers such as myself. I\u2019m not going to use a car mechanic who is 5 dollars less because my loyalty and faith that I\u2019m not going to get ripped off is worse more than 5 dollars.<\/p>\n
Yet I\u2019m surprised when plan sponsors replace a good plan provider for something as little as 5 basis points. The work of a good retirement plan provider is certainly worth 5 basis points more or whatever is that negligible amount that the plan sponsor is going to save by using the plan provider across the street.<\/p>\n
Again, plan sponsors must pay reasonable plan expenses. That means they don\u2019t have to pay the lowest plan expenses. Plan sponsors who make a change of plan providers for something as little as 5 basis points end up costing themselves more than 5 basis points when the new plan provider isn\u2019t as competent as the old plan provider.<\/p>\n
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