PCI Principal, Chris Thixton QPA, C(k)P® recently spoke with InvestmentNews about the developing state of 401(k) plan fees. The article explores whether decreases in plan assets — from market action, COVID-19, and the CARES Act — will lead to increases in record keeping costs for participants.
The April 13, 2020 piece highlights the different fee arrangements plans may have linked to asset levels. According to InvestmentNews author, Emile Hallez, retirement plans are on track to lose a considerable amount of assets this year in light of Covid-19-related business interruptions, and with that, increased costs for participants.
Thixton states in the article, “There’s no standardization in this industry in terms of how fees are assessed.” He also reinforces that plans with a tiered fee schedule, which lowers record keeping costs across all assets when a certain level is reached, would be most affected by falling asset levels. However, “this kind of arrangement is less common today than it once was,” he noted.
He goes on to say, “We want fees to be low — not just reasonable…If we keep our fees low, every dollar we save is another dollar for retirement,” he said. “[But] this is in general not a time to go and renegotiate your fees.” His view? Plan fiduciaries need to be mindful of the fees being paid by their plan and ensure that their participants don’t suffer.
Could plans with an older asset-based tier fee arrangement lose discounts and see increase plan fees as they lose assets? Read Thixton’s insights in the full article: https://www.investmentnews.com/401k-assets-higher-fees-191438