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Don Faller, CFP C(k)P

Don Faller, CFP C(k)P, has built a nationally recognized reputation as an expert in matters pertaining to the financial operation of ERISA plans and related retirement benefit programs.

Top 3 Retirement Plan Fees Explained

With consumers concerned about safeguarding their funds, fiduciary risk management is an important part of investing today. However, fees can substantially cut into the earnings a person sees if they pay more than necessary. As a financial plan advisor, it’s important that you fully understand these fees so you can pass the information on to your clients.

Plan Administration Fees

A plan fiduciary puts considerable time and effort into managing a client’s retirement fund. Administration fees pay for day-to-day operational costs, including the salary of the person handling that administration. These fees can be deducted from the earnings on a plan, or they can be charged separately. It’s important to fully disclose these fees and take measures to ensure they remain reasonable.

Investment Fees

The largest chunk of fees on most plans come from investment fees, which are deducted from the returns on a person’s investment. These fees can be easily missed, since they aren’t always listed on the statements that businesses and their employees receive. One study found that over 40 years, a millennial can lose $590,000 with just a 1 percent fee. Investment fees can include sales fees related to buying and selling shares and management fees charged by the investment manager for administering the account.

Service Fees

If a plan member chooses individual investments, there may be fees directly associated with those. Unfortunately, those fees can add up significantly, especially if there are more than one on a plan. In addition to requesting specific plan options, members may pay fees for taking out loans on their retirement savings accounts. Advise members on how they may be able to reduce those fees to recoup some of the earnings they lose each year.

Fee reduction is an important part of fiduciary risk management. Plan advisors and business HR teams should fully understand the fees each account is being charged and help members find ways to keep them as low as possible. If fees remain unchecked, members could find their earnings significantly reduced over the course of the plan.


FiduciaryFirst is a Maitland, Florida based company that provides independent retirement plan fiduciary support with a holistic approach. Our comprehensive Prudent Fiduciary ProcessSM (PFP) enables employer groups to address fiduciary standards. For more information about pension consulting call us at 866-625-4611 or contact us online.

Tracking Number: 1-666783

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

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Contact Details

1060 Maitland Center Commons

Suite 360

Maitland, FL 32751

Phone: 866-625-4611

Fax: 407-740-6113

Email: info@fiduciaryfirst.com 

Disclaimer

Retirement Plan Consulting Program and other advisory services offered through LPL Financial, a registered investment advisor.

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice.  Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation.  In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

 

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