Jump to content

Alternative Methods for Determining Fees in Lieu of Revenue Sharing


rocknrolls2

Recommended Posts

Company X has entered into a contract with Provider Y to provide recordkeeping services with respect to its 401(k) plan. For years, it has arranged for revenue sharing through investments in mutual funds not affiliated with Y which provide a rebate of a specified number of basis points. To continue with the trend of DC plans to shun revenue sharing arrangements, X would like to determine Y's fees on some basis other than revenue sharing. Some obvious ones that come to mind are a flat dollar fee per participant, a flat dollar fee per transaction (e.g., a loan) and a set amount per hour in connection with the performance of other services. Does anyone have any other alternative methods of arriving at fees that they have seen or encountered?

Thanks.

Link to comment
Share on other sites

X would like to determine Y's fees on some basis other than revenue sharing.

I understand not wanting to use revenue sharing, but do they have a problem with keeping the fees set by using basis points?

I just set up a plan last week though a major RK with all non-revenue sharing funds. The still state their fee as a matter of basis points, and are paid by plan funds, just not via revenue sharing.

 

 

Link to comment
Share on other sites

I agree with Rather, just charge an asset fee on non-revenue sharing funds. Easy to calculate and easy to explain. They can choose to have the fee be billed or deducted.

I don't like revenue sharing....I won't disagree with those that use them...

I tend to stay away from the per participant charge because I don't want to count number of employees. If I did have to count, I'm charging for every person I have to account for at testing time, whether or not they have balance.

I like answering when someone asks what are the fees I am paying? You pay the fund expense fee and an asset fee. Done.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...