Regulatory Environment Causes Employers to Review 401k Plans Fees
BALTIMORE, MD -– September 20, 2004 – An increasingly challenging legal and fiduciary climate, resulting from mutual fund scandals, the SEC's revenue sharing investigation and the Department of Labor's focus on fiduciary responsibility, has caused an increasing number of employers to review their 401k plan fees and services.
These employers and many others will find the newly released, 401k Provider Directory Averages Book 7th Edition to be a very timely and valuable resource. "With all the focus on 401k fees and fiduciary responsibilities, employers need to know how their fees compare to their peers," says Joseph W. Valletta, CFA, co-author of the 401k Averages Book and principal of HR Investment Consultants. "Given today's investment and legal climate, if an employer is paying more than the average cost shown in the book, they might want to find out why and then decide what to do about it."
How Much Should a Plan Expect to Pay for 401k Services?
"A question we are often asked," says David W. Huntley, co-author of the 401k Averages Book and principal of HR Investment Consultants, "is how much should a plan of our size expect to pay for 401k services? We think the Averages Book helps answer this important question." The 401k Provider Directory Averages Book is the only source available for comparative 401k average fee and service information. The book is designed to help employers quickly benchmark their plans. The Averages Book begins with a step-by-step guide on how to benchmark a 401k plan. A chapter illustrating trends in 401k costs since 1995, and eight chapters detailing specific scenarios for plans from 25 to 5,000 participants make up the body of the book. A helpful comprehensive fee worksheet, which allows employers to make apples to apples comparisons, is included at the end of the book.
Investment Expense Accounts for 81% to 98% of Total Plan Costs
This is just one of the many useful pieces of information found in the 401k Provider Directory Averages Book. "We found that investment expenses account for upwards of 81% of total plan costs in smaller plans and 98% in larger plans," said David W. Huntley, a principal of HR Investment Consultants. "If an employer really wants to cut their 401k costs they need to examine their investment related expenses."
Wide Range Between Low and High Cost Providers
The Averages Book illustrates the very wide range that exists between the low and high cost providers. According to Valletta, "If you don't know how much your plan costs, you are asking for trouble. This book will help employers compare their costs and keep their plans from being on the high range of the averages." The range between the high and low total per participant fees charged on a 500 participant plan, with $40,000 average account balances is $205 to $818. The average fee is $482 per participant.
The 401k Provider Directory Averages Book is published by HR Investment Consultants. The Averages Book is available for $95.00. The Averages Book can be ordered by calling 888.401.3089 or via the Internet at www.401ksource.com.
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