Fiduciary liability for selection and monitoring investment advisers.

[Guest Dale C]

It is clear that a plan sponsor has a fiduciary liability to select and monitorinvestment advisers. What is the typical cost for this service?

1. Initial selection of funds?

2. On going monitoring?

[Guest RWF]

Generaly a Finanical Advisor will chage 80 to 100 basis points annually. For that they generally write the investment policy statement for the client. Send a fund performance newsletter monthly. Set criteria on the expected performance of the investments in the plan

[Guest PWBAer]

Most performance monitoring companies have a fixed fee between $1000 and $6000 annually. They will evaluate your investment results and compare them to similar investment managers or funds. Brokerage firms offer WRAP arrangements which are normally a basis point fee whereby you can select from certain managers to manage your plan assets. Some bank trust departments now offer investment evaluations, whether or not you are a current client.

[Jon Chambers]

We're an investment advisory firm, and I'd love to get 80 to 100 basis points for fund selection and monitoring. However, fees in the range of 10 to 40 basis points are more common for mid-size plans ($5 million to $50 million for us). This would typically include investment policy, fund selection, monitoring, constructing allocated portfolios, investment communications and/or education (96-1 compliant of course), etc. Fee varies with service required. For larger plans, we generally bill out hourly at $210 to $250 per hour.

[Guest AKeith]

If you use a registered rep then there probably will not be a charge for these services. The commissions they receive from the fund company allow them to provide fund information and other services free. Most fund companies will also provide enrollment and communication materials free also. However for large plans a fee may be required to cover their expenses.