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Ret plan investments - costs


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Guide to Retirement Plan Fees and Expenses
11 pages. "[R]etirement plan fees can be classified into three main categories: [1] Asset-based fees and expenses are calculated as a percentage of plan assets and can be based on a portion or all assets of the Plan. [2] Participant-based fees and expenses are calculated based on the number of participants in the Plan, or eligible for the Plan. [3] Itemized service fees and expenses are typically applied as a fixed charge for a specific service provided to the Plan or a specific participant." (Multnomah Group; free registration required)
Know Thyself: Socratic Thoughts on Defined Benefit Fee Policy Statements
"DB plans generally require a more complex collection of services than DC plans which can make price benchmarking difficult for fiduciaries.... The value of these services to plan participants and the fees they generate can vary widely based on the complexity of the plan and the level of sophistication of each service. Unless fiduciaries can demonstrate that they have considered the level of these fees relative to the quality of services being provided on behalf of participants, they remain at risk." (The Principal Blog)
These Three Firms Own Corporate America
"In the past, individuals and large institutions mostly invested in actively managed mutual funds ... But since the financial crisis of 2008, investors have shifted to index funds ... [F]rom 2007 to 2016, actively managed funds have recorded outflows of roughly $1,200 billion, while index funds had inflows of over $1,400 billion.... This shift, arguably the biggest investment swing in history, is due in large part to index funds' much lower costs.... The fast-growing index sector ... is dominated by just three giant American asset managers: BlackRock, Vanguard and State Street ... [which,] taken together, have become the largest shareholder in 40% of all publicly listed firms in the United States." (The Conversation)
[Opinion] Four Ways to Cut Fat 401(k) Retirement Fees
"Most Americans are paying too much when it comes to retirement fund management.... What's the best way to avoid these fees? [1] Always work with a 'no-load' fund company.... [2] Don't go with 'house' funds.... [3] Always read your fund disclosures.... [4] Make a move if you're getting gouged." (John Wasik in Forbes)
A New Format for Plaintiffs' Complaints in ERISA Fiduciary Breach/Excessive Fee Cases?
"The investment industry is quick to try to defend a fiduciary's selection of actively managed mutual funds on the argument that ERISA does not require that a plan fiduciary only select the cheapest investment options.... [The Restatement of the Law (Third) of Trusts indicates] that a fiduciary still has a duty to select only those actively managed funds that provide a plan and plan participants with benefits that are commensurate with the added costs and risks resulting from the actively managed funds.... [T]he Restatement provides plan participants and their counsel with the perfect blueprint of providing the courts with an applicable fiduciary standard and proof to defeat any motion to dismiss." (The Prudent Investment Adviser Rules)
Making Sure 401(k) and 403(b) Fees Are 'Necessary' and 'Reasonable'
"[A scoring system] adds an objectivity that cannot be as easily affected by the really skilled sales people you'll be talking with and listening to.... It's very likely that by the time you've finished with interviews, scoring and group discussion your choice will have emerged. If it hasn't, identify what further information you need to get to a decision.... Plan on your conversion taking 90 and 120 days from the date on which you sign on the dotted line, usually a letter of intent, until assets move." (Fiduciary Plan Governance, LLC)
Latest Wave of 401(k) Suits Yields Big Wins, and Big Losses, for Plaintiffs
"Since 2006, plaintiffs' firms have filed more than 90 lawsuits against employers and other parties alleging excessive fees in 401(k)-style retirement plans ... Last year alone, firms representing 401(k) participants filed more than 25 such cases -- a record annual number. Many of the latest suits target companies -- including a number of financial-services firms -- for using their own investments in their retirement plans." (The Wall Street Journal; subscription may be required)
[Opinion] Pension Investment Advisory Fees -- Once High, Now Getting Higher
"The national consulting firms ... indicated they generally maintained only 'published' fee databases, which are of limited utility.... Given the ease with which data regarding fees can be compiled, ... the lack of in-depth fee information might be due, in part, to conflicts of interest in the pension consulting industry. Consultants, eager to maintain favorable relations with money managers (to whom they also sell services) might not be motivated to negotiate with managers too vigorously on behalf of their clients. Client ignorance regarding investment advisory fees permitted greater consultant latitude in negotiating." (Edward Siedle, in Forbes)
American Airlines Inks $22M Deal in 401(k) Funds Challenge
"The proposed class action targeted the American Beacon funds in the airline's 401(k) plan, which participants said were overly expensive and 'complete failures in the marketplace.' These funds earned fees for the airline's corporate family and caused the plan to lose tens of millions of dollars in excessive fees and lost earnings, the lawsuit alleged... This $22 million deal ... dwarfs recent settlements in lawsuits against employers that include affiliated investment funds in their 401(k) plans." (Bloomberg BNA)
MFS Investment Management Sued Over Claims of Self-Dealing in 401(k) Plans
"In 2015, ... 60 of the plan's 76 funds were proprietary MFS mutual funds, according to the complaint, which also alleges 98% of the plans' investible assets were held in MFS-affiliated investments throughout the relevant time period." (Pensions & Investments)
Making Sure 401(k) and 403(b) Fees Are 'Necessary' and 'Reasonable'
"You should create a master list of items you want to see addressed by each respondent. This can, essentially, be the items in your RFP. You'll want to create a fairly detailed spreadsheet to analyze the fee component of the proposals." [The authors provide a list of items to consider.] (Fiduciary Plan Governance, LLC)
Fidelity, American Century Adopting New Target Date Fee Tactic as Cost Pressures Grow
"The two asset managers are the first among their peers to switch to a 'single fee' management structure in their target-date mutual funds, analysts said. This structure allows the firms to charge a fixed fee for their funds, irrespective of the underlying funds that make up the portfolios. Target-date managers have historically used an 'acquired fee' model, whereby firms determine the cost of the overall portfolio based on the asset-weighed cost of the underlying funds." (Pensions & Investments)
Pioneer Natural Resources Participant Suit Alleges Unreasonably Expensive Investment Options in 401(k) Plan
" 'Instead of leveraging the plan's bargaining power to benefit participants and beneficiaries, the Pioneer defendants chose inappropriate, higher-cost mutual fund shares classes,' said the June 28 complaint filed in U.S. District Court in Denver ... These actions 'caused the plan to pay unreasonable and excessive fees for record keeping and other administrative services.' The complaint said the Pioneer Natural Resources USA Inc. 401(k) and Matching Plan had $500.2 million in assets as of Dec. 31, 2015." (Pensions & Investments)
401(k) Self-Dealing Suit Filed Against Waddell & Reed
"The complaint alleges that, instead of acting for the exclusive benefit of the 401(k) plan and its participants and beneficiaries, the defendants ... [forced] the plan nearly exclusively into investments managed by WR Financial or an affiliated entity, which charged excessive fees ... and which performed worse than comparable available options. The lawsuit says the defendants could have chosen nonproprietary, less costly, better-performing investment options for the plan." (planadviser)
Nationwide Accused of Charging Excessive 401(k) Fees
"The lawsuit, filed June 27 by a participant in a small 401(k) plan sponsored by Andrus Wagstaff PC, says Nationwide's practice of charging a flat, 1 percent fee for administrative services allowed the company to collect fees that were nearly 10 times the median fee throughout the industry." (Bloomberg BNA)
Voya's Win in 401(k) Fee Suit Involving Financial Engines Bodes Well for Other Record Keepers
" 'The court here has said that an entity can be a fiduciary for some purposes and not others, and with respect to this fee issue, Voya was not a fiduciary,' [attorney John Utz] said. 'It was not a fiduciary because it wasn't acting as a fiduciary in negotiating fees, and ... once the arrangement was in place, there was not anything Voya could do to control its compensation.' Voya, for example, couldn't control the number of participants using the personalized advice services offered in the Nestle 401(k) plan." [Patrico v. Voya Financial, Inc., No. 16-7070 (S.D.N.Y. June 20, 2017 ] (Pensions & Investments)
Voya Scores Win in ERISA Suit Over Robo-Adviser Fees
"The investor, a participant in Nestle USA Inc.'s 401(k) plan who filed a proposed class action, can't use [ERISA] to challenge Voya's fees, a federal judge ruled June 20. That's because Voya wasn't acting as an ERISA fiduciary when it negotiated the fees for Financial Engines' advisory services, the judge said." [Patrico v. Voya Financial, Inc., No. 16-7070 (S.D.N.Y. June 20, 2017 ] (Bloomberg BNA)
Putnam, Fidelity Win 401(k) Lawsuits
"A federal judge shot down plaintiffs' arguments that Putnam breached its fiduciary duty to its own 401(k) plan participants by "stuffing" the plan with Putnam-affiliated investment funds, without regard to cost, performance or other metrics.... The Fidelity lawsuit, Ellis et al. vs. Fidelity Management Trust Co., concerned the firm's alleged mismanagement of a stable value fund. Plaintiffs claimed the fund's low investment returns and high fees made it an imprudent investment for 401(k) plan participants." (Pensions & Investments)
Allianz Workers Win Class Certification in Suit Over 401(k) In-House Funds
"U.S. District Judge Josephine L. Staton June 15 conditionally granted the plan participants' motion for class certification. Participants sufficiently showed they have standing to continue as a class by producing evidence suggesting that Allianz managed and selected funds for the plan based on whether the funds would benefit the company rather than the participants[.]" (Bloomberg BNA)
Mutual Fund Fees Continue to Decline for 401(k) Plans
"Expense ratios for equity mutual funds in 401(k) plans declined again in 2016, falling to 48 basis points from 51 basis points in 2015 ... This average asset-weighted expense ratio of equity mutual funds in 401(k) plans has fallen almost steadily from the 83 basis points reported in 2003[.]" (Pensions & Investments)
Why Actively Managed Mutual Fund Performance Is About To Improve
"[M]utual funds currently have to report their performance net of commissions and broker compensation. But as broker-dealers shift to being compensated by levelized commissions outside of the funds (even if the consumer still pays a 1% fee via the broker-dealer equivalent to the 1% trail in a C share), the mutual fund itself will no longer have to count the broker's compensation against their own performance!" (Nerd's Eye View)
The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2016 (PDF)
32 pages. "401(k) plan participants investing in mutual funds tend to hold lower-cost funds.... The expense ratios that 401(k) plan participants incur for investing in mutual funds have declined substantially since 2000 ... The downward trend in the expense ratios that 401(k) plan participants incur for investing in mutual funds continued in 2016." [Also available: Supplemental Tables.] (Investment Company Institute [ICI])
Alternate Fee Calculation/Allocation Models
"[M]ost retirement plan sponsors have an understanding of the two primary methods used by recordkeepers to charge fees to plans and participants: As a percentage of plan assets ... As a flat dollar amount per participant account balance ... While a number of alternative models have been proposed by recordkeepers, the ones that appear to attract the most plan sponsor attention are: Modified flat fee ... Basis point allocation of flat dollar fee ... [and] Percentage of assets/basis point fee with a per-head cap[.]" (Cammack Retirement Group)
Another Money Manager's Investment Menu Draws Lawsuit by Its Employees
"While it is not unusual for such lawsuits to spend time and space (and tables) outlining gaps in performance and fees, this one takes the menu on one fund after another -- through 26 core funds, then to (and through) a half dozen of the portfolio series 'funds of funds,' then through the entire series of target-date funds (all the way through 2060) and then to each of the Collective Investment Trust (CIT) offered by the program -- along the way making the case that the fees charged were 'well in excess of the fees' charged by the unaffiliated companies for comparable funds." (National Association of Plan Advisors [NAPA])
Northrop Grumman Settles 401(k) Fee Class Action for $16.8M
"The deal ... resolves claims by a class of more than 100,000 people who participated in Northrop's retirement plans between 2000 and 2009. The lawsuit accused Northrop of forcing 401(k) plan participants to pay excessive administrative fees -- some of which went directly to Northrop. This is the latest multimillion-dollar settlement over 401(k) plan fees to be negotiated by St. Louis-based Schlichter Bogard & Denton." (Bloomberg BNA)
Court Dismisses Chevron Fee Complaint a Second Time
"Chevron has many facts in common with other 401(k) plan fee cases -- plaintiffs generally challenge as imprudent the use of certain funds in the plan's fund menu and the revenue sharing-based fees paid to the plan's recordkeeper. The new decision is interesting for its discussion of plaintiffs' duty of loyalty claim and its dismissal of plaintiffs' claims based on the availability of 'identical lower-cost share classes.' " [White v. Chevron Corp., No. 16-793 (N.D. Cal. May 31, 2017)] (October Three Consulting)
Merrill Lynch Settles Suit with Small 401(k) Class
"The deal features a 'corrective remediation payment' totaling at least $8.8 million ('equal to the deficient remediation payments and interest sought by Plaintiffs from the outset') and a 'disgorgement payment' of $16.2 million. Class counsel will request attorney's fees equal to 35% of the settlement payment, or $8.75 million.... Most of the mutual funds available on Merrill Lynch's retail platform offered waivers on up-front sales charges for retirement plans; however, the firm failed to apply those waivers." (National Association of Plan Advisors [NAPA])
The Lawyer on a Quest to Lower Your 401(k) Fees
"When Jerome Schlichter started filing 401(k)-fee lawsuits against big companies a decade ago, the personal-injury lawyer from St. Louis wasn't taken seriously.... Companies now are so worried about suits alleging mismanagement of these retirement plans that 401(k) industry consultants have coined a term for the threat: 'getting Schlichterized.' ... Last year, law firms filed more than 25 fee cases against 401(k)-type plans ... That includes 14 from Mr. Schlichter's firm against employers including elite universities.... Consumer advocates say the litigation has saved 401(k) participants nationwide billions of dollars by helping to push down 401(k) fees, which declined 17% from 2009 to 2014[.]" (The Wall Street Journal; subscription may be required)
Merrill Lynch to Pay $25M in Lawsuit Over Fees in Small 401(k)s
"Merrill Lynch, Pierce, Fenner & Smith Inc. will pay $25 million to settle a lawsuit that accused the broker-dealer firm of profiting from excessive fees charged to small 401(k) plans... The deal features a 'corrective remediation payment' totaling at least $8.8 million and a 'disgorgement payment' of $16.2 million, the motion said. Class counsel will request attorneys' fees equal to 35 percent of the settlement payment, or $8.75 million, the motion said." (Bloomberg BNA)
Washington University Is 15th School Sued Over Retirement Plan
"The lawsuit, filed June 8 in the U.S. District Court for the Eastern District of Missouri, says the university's retirement plan overpaid for administrative and record-keeping services and offered 'historically underperforming' investment options. The lawsuit takes particular aim at the plan's reliance on two companies -- TIAA and Vanguard -- for record-keeping services. The use of multiple record keepers confuses investors and leads to higher fees, the lawsuit claims." (Bloomberg BNA)
[Opinion] The Pension Prescription: Good Governance and a Willingness by Plan Sponsors to Share the Risk
"There is a misconception that allocating to external private equity and hedge fund managers is a waste of time and money and that these pensions can improve their funded status by removing these funds from their asset mix ... Sure, in some cases, it makes sense to cut external managers ... But cutting all allocations to private equity isn't wise, nor in the best interests of pension plan beneficiaries. These programs have added significant added value to most US public pensions, net of all fees." (Pension Pulse)
Princeton Joins List of Schools Sued Over Retirement Plans
"Like many other schools, Princeton is accused of failing to effectively negotiate for lower plan fees; choosing high-fee investment options that consistently underperformed their benchmarks; overpaying for record-keeping services by using multiple plan record keepers; and offering a TIAA-affiliated fixed-income fund that unreasonably restricted investors' options." (Bloomberg BNA)
Will the Fiduciary Rule Save Investors Money?
"According to a Morningstar report, the implementation of the fiduciary rule will spark the launch of more than 3,500 shares of two new classes of low-fee offerings in individual retirement accounts.... [T]he idea behind the new share class is to create uniformity in what brokers are selling to avoid perceived favoritism. The question for investors is whether these new shares will yield any significant savings in their retirement portfolios over time." (U.S. News & World Report)
The Latest on Higher Education Fee Litigation
"The University of Chicago lawsuit is very similar to the earlier 12 lawsuits, but additionally asserts that TIAA's loan program constitutes a prohibited transaction and that TIAA failed to disclose indirect fees related to that loan program. While the Schlichter Bogard & Denton law firm ... has filed the majority of these lawsuits, two have been filed by other law firms. This suggests that more law firms are likely to jump into the fray[.]" (Ice Miller LLP)
Average Fund Fees Paid by Investors Continued to Decline in 2016
"The asset-weighted average expense ratio across all funds was 0.57% in 2016, down from 0.61% in 2015 and 0.65% three years ago.... The simple average expense ratio of the largest 2,000 funds (in 2013), which accounted for 85% of assets in mutual funds and ETFs, was 0.72%, in 2016, unchanged from 2014 and 2015.... The asset-weighted average expense ratio of passive funds was 0.17% in 2016 compared with 0.75% for active funds. This wide fee gap, coupled with record flows of $429 billion into passive funds and $326 billion out of active funds in 2016, contributed to falling industrywide asset-weighted average expense ratios." (Morningstar)
University of Chicago Latest College Hit with Retirement Plan Suit
"The lawsuit alleges the university selected and retained investment funds and insurance company annuities that caused the plans to incur far higher administrative fees and expenses relative to the size of the plans, causing participants millions of dollars in economic loss. The university selected numerous underperforming investment options when lower-cost alternatives were available, according to the complaint filed May 18 in federal court in Illinois." (Bloomberg BNA)
Trends in the Expenses and Fees of Funds, 2016 (PDF)
32 pages. "The average expense ratios for money market funds rose 5 basis points in 2016 to 0.18 percent.... Expense ratios of target date mutual funds averaged 0.51 percent in 2016.... Average expense ratios for both actively managed and index equity mutual funds have fallen since 1996.... Economies of scale and intense competition are putting downward pressure on expense ratios of exchange-traded funds (ETFs)." [Also available: Supplemental Tables (XLS)] (Investment Company Institute [ICI])
Court Decisions on Investment Fees Provide Hope for Plan Sponsors
"[I]t is important for plan sponsors to understand that it is not their responsibility to include only the lowest cost investments in each asset category within their retirement plan. It is not required, and it should not be the case, that plan fees are the sole determining factor when selecting investments.... Each investment must be evaluated in the context of its overall performance, cost, and the value received through its role in the plan portfolio. Plan sponsors using cost as the only factor are potentially failing to fulfill their responsibility to finding investments that are reasonable and competitive." (Cammack Retirement Group)
401(k) Plan Fees: The Wrong Choices Could Land You in Court
"Before determining if their plan fees are reasonable, employers need to ... answer a number of critical questions including: [1] What am I buying? [2] How much does it cost (investment, administrative and advisory services)? [3] Who is going to pay (participants and employers)? [4] How are they going to pay? [5] What model is best for us?" (CFO Daily News)
Vanguard Growing Faster Than Everybody Else Combined
"In the last three calendar years, investors sank $823 billion into Vanguard funds, the company says. The scale of that inflow becomes clear when it is compared with the rest of the mutual fund industry -- more than 4,000 firms in total. All of them combined took in just a net $97 billion during that period, Morningstar data shows. Vanguard, in other words, scooped up about 8.5 times as much money as all of its competitors." (The New York Times; subscription may be required)
Sharp Attention Needed to Interpret Retirement Plan Fee Data
"Even with huge amounts of data available, there is not very much simple or straightforward about retirement plan fee benchmarking.... Perhaps even more helpful to plan sponsors and participants than the massive amounts of raw data on their own product choices is the increased prevalence of third-party fee comparison studies, which aggregate and benchmark information from broad pools of retirement plans and investment providers." (PLANSPONSOR)
Quantitative Methods Identify Significant Fee Waste in Retirement Plans (PDF)
15 pages. "[This study] analyzed 52,529 retirement plans from the DOL EFAST database. Using quantitative methods [the authors] estimate that participants could save .25% a year on a weighted average basis by switching into lower cost investments that are quantitatively very similar to those they already hold.... As of March 2015 total defined contribution plan assets stood at $6.8 trillion. This means that savings of approximately $17.07 billion annually are being wasted in the retirement industry." (RiXtrema Research)
BlackRock Accused of Self-Dealing with 401(k) Plan
"The proposed class action ... alleges that participants in the 401(k) plan were subjected to higher hidden fees through excessive fund layering, where one BlackRock fund invested in a 'rabbit hole' of other BlackRock funds.... [T]he lawsuit ... alleges that the fees plus the poorly performing funds have caused participants to lose $60 million in retirement savings. The plan has more than 9,700 participants." (Bloomberg BNA)
Fee Study of 525 401(k) Financial Advisors Shows Why Trump Can't Reverse Tide of Fiduciary Advice
"Even if this ban on conflicted retirement plan advice is squashed, ... the die is cast. Following several high-profile excessive fee lawsuits, more 401(k) plan sponsors than ever are hiring fiduciary-grade financial advisors to lower their liability. The kicker? Their impartial advice is often cheaper than potentially-conflicted, non-fiduciary advice. And [here are] the numbers to prove it!" (Employee Fiduciary)
[Opinion] Updated Website Aims to Simplify Teachers' Retirement Choices
"[CalSTRS] has finally upgraded the website where public-school employees can get educated about their 403(b) retirement plan options, making it easier to compare fees and performance and sign up for a plan. While the upgrade of 403bcompare.com could save teachers some serious bucks, it's still not perfect because there is no easy way to compare the thousands of options available in the public schools. What it does do is highlight the shamefully daunting task teachers face trying to save for retirement." (Kathleen Pender, in San Francisco Chronicle)
Jackson National Sued Over In-House Funds in 401(k)
"The proposed class action claims that Jackson's retirement plan invested 89 percent of its assets -- about $542 million -- in investment funds that earned high fees for the company and its affiliates. Eighteen of the plan's 21 investment options were affiliated with Jackson, the lawsuit claims, and most of those options were 'virtually identical' to funds that other institutions offered at 'a fraction of the cost.' " [Pease v. Jackson Nat'l Life Ins. Co., No. 17-284 (W.D. Mich., complaint filed Mar. 29, 2017] (Bloomberg BNA)
USC Can't Force Retirement Plan Fee Claims Into Arbitration
"The participants' ability to bring claims of fiduciary breach under [ERISA] is unaffected by their arbitration agreements with USC because those claims are, by their nature, plan claims and the plan didn't consent to arbitrate, Judge Virginia A. Phillips of the U.S. District Court for the Central District of California held March 23." [Munro v. Univ. of So. Calif., No. 16-6191 (C.D. Cal. Mar. 23, 2017)] (Bloomberg BNA)
Anthem Workers Advance Challenge to 401(k) Plan Fees
"The proposed class action accuses the committee of including high-fee mutual fund share classes in Anthem's 401(k) plan and paying excessive record-keeping fees to Vanguard Group Inc. A federal judge largely denied the committee's motion to dismiss on March 23, saying that choosing high-fee share classes when identical lower-fee classes were available could constitute fiduciary breach under [ERISA]." [Bell v. Pension Comm. of ATH Holding Co., No. 15-2062 (S.D. Ind. Mar. 23, 2017)] (Bloomberg BNA)
Can Smaller Plan Sponsors Dream Big? Yes! A Case Study
"Recordkeeping fees were cut in half and a new best-in-class investment menu with a low cost index tier was implemented, along with transparent, direct-billed participant fees to replace revenue sharing (a unique arrangement for a 403(b) plan of this size). How did a plan sponsor such the size of [the Anglican Church in North America] accomplish so much and so quickly?" (Cammack Retirement Group)
Four Questions to Guide Your Fee Evaluation Process (PDF)
"[1] Who is receiving compensation from your plan? ... [2] What are the fees and expenses associated with your plan? ... [3] How do your fees and expenses compare to other service providers or investment options? ... [4] Why is the compensation warranted?" (TIAA)
Updated SEC Investor Bulletin: How Fees and Expenses Affect Your Investment Portfolio
"The SEC's Office of Investor Education and Advocacy is issuing this updated bulletin to educate investors about how fees you pay for investment services and products can impact the value of your portfolio.... These fees may seem small, but over time they can have a major impact on your investment portfolio. [A] chart shows an investment portfolio with a 4% annual return over 20 years when the investment either has an ongoing fee of 0.25%, 0.50% or 1%." (U.S. Securities and Exchange Commission)
Eight Circuit Remands Tussey v. ABB, Inc. for Second Time, Instructs District Court to Evaluate Methods of Measuring Plan Losses Caused by Fiduciary Breach
"[T]he Eighth Circuit had proposed an alternative method of calculating losses ... but on remand the district court erroneously considered itself bound by that proposal. The Eight Circuit in the second appeal stated that the district court was not bound to follow that proposal but instead was required to: [1] Evaluate several different possible methods for measuring losses before choosing the proper method. [2] Consider the plan participants' contentions about why, in their view, the Eighth Circuit's proposed method of valuing the plan participants' losses was not the correct method to apply." [Tussey v. ABB, Inc., No. 15-2792 (8th Cir. Mar. 9, 2017)] (Practical Law Company)
401(k) Fees: Questions Frequently Asked by Plan Fiduciaries
"What are the basic types of 401k fees? ... How are 401k providers compensated today? ... What's the best resource for finding my 401k provider's fees? ... What's the process for totaling my 401k plan fees? ... How do I benchmark my 401k plan fees?" (Employee Fiduciary)
Is It Time to End the 12b-1 Fee?
"[T]he reality is that financial advisors, custodians, broker-dealers, and product providers still need to get paid for what they do, which means eliminating the 12b-1 fee still won't necessarily bring down costs for the end client. Instead, it would likely just shift where and how financial advisors and their platforms get paid. Nonetheless, given the 12b-1 fee's implicit conflicts, and their declining relevance, arguably it's time to create a more appropriate pricing structure for the realities of today's investment marketplace!" (Nerd's Eye View)
Fiduciary Fee Reasonableness
"There is no shortage of legal activity surrounding fee reasonableness. Fiduciaries can draw a variety of lessons from the alleged breaches, complaints filed, settlements, and court decisions. [This article provides] an overview of the most frequently litigated issues relating to fees, and the corresponding lessons that fiduciaries should learn." (Manning & Napier)
401(k) Plan Fees Continue to Crater
"The average total plan cost for a small retirement plan (defined as 100 participants and $5 million in assets) declined from 1.28 percent to 1.25 percent over the past year, while the average total plan cost for a large retirement plan (defined as 1,000 participants and $50 million in assets) declined from 0.97 percent to 0.96 percent.... Reflecting economies of scale, the average cost for a micro plan (10 participants and $500,000 in assets) is 1.85 percent ... [T]he range between the high and low total plan costs on a small plan is .46 percent to 1.69 percent, while a large plan is 0.28 percent to 1.21 percent." (401K Specialist)
Schwab Employee 401(k) Lawsuit Uses Vanguard as Exhibit 'A'
"Schwab is just the latest in a line of quality firms being sued by their own employees ... for serving up allegedly subpar home cooking when it comes to pension care.... [S]imilar firms sued under similar circumstances tend to have to settle for big amounts.... What's certain is that this type of suit is especially toxic for a firm whose value proposition is tied so closely to trust." (RIABiz)
[Opinion] Why Planning Fees Should Be Payable from Retirement Accounts
"[If] the aim of tax policy is to facilitate better outcomes for consumers, it's worth acknowledging that the current framework unintentionally exhibits poor behavioral characteristics by limiting the ability of consumers to pay for long-term financial planning advice from accounts that are ear-marked for long-term goals (or forcing those financial planning fees to be bundled with [assets-under-management (AUM)] fees or product commissions that may not be practical or feasible in all situations)!" (Nerd's Eye View)
J.P. Morgan Faces Second Lawsuit Alleging Self-Dealing in 401(k) Plan
" 'Rather than engage in systematic, arm's length review of available plan investment options, J.P. Morgan sought out investment options that allowed its affiliates and business partners to reap outsized fees,' said the lawsuit ... The lawsuit alleged that half of the 401(k) plan's investment options were affiliated with J.P. Morgan and another 20% were BlackRock Inc. options. BlackRock is not a defendant." (Pensions & Investments)
Plan Sponsors Should Beware the Managed Account Default Option
"Increasingly, sponsors are signing up for managed accounts as the plan's default option ... [and] a growing number of providers offering lower administration fees in exchange for offering the managed account as the qualified default investment alternative. This makes it ever more important that those options are appropriately analyzed, selected and monitored to provide the highest level of service to plan participants. Organizations offering managed accounts face a particular challenge fulfilling their fiduciary duties, because while some employees are actively involved, typically a sizable percentage of employees fail to engage despite picking a self-directed option." (Pensions & Investments)

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