By now your employees have received a full disclosure of all fees they pay on their 401(k) plan, thanks to the new regs that went into effect in July. But some participants may be realizing that the truth hurts.
Many of those employees may be surprised at just how much they are paying. And there may be some pressure from participants to lower those 401(k) fees. But it could also be that employees aren’t fully recognizing plans with the best value.
The question is: Where to start?
Now’s a good time to visit the Investment Company Institute’s (ICI) 2011 study on 401(k) plans. The ICI study took an expansive look at 401(k) plans and identified some areas that could result in lower fees, or a better understanding of the value of their plans.
Paying out of pocket
Paying to save might seem backward at first, but plan sponsors that pay out-of-pocket for a portion of the costs are able to consider other funds or share classes for participants that would have no bundled servicing fees.
Services and benefits
Some plans may offer one-on-one advice for participants from investment advisers and counseling pros, but this comes at a cost to participants, whether they realize it or not. Consider cutting some benefits, especially if a majority of participants aren’t utilizing these services.
Competing products
Give participants plenty of information on all investment products, including mutual funds, that are available to them. Some products that appeared attractive before the full disclosure of these fees might no longer seem so — and vice versa.
Since the full disclosure regs came into effect, how have your employees been responding? Has there been pressure to lower fees or change services? Let us know in the comments below.
