Like you, we are concerned about employees who are paying too much for their retirement plan. It is not uncommon for 401(k) middlemen to line up mutual funds and insurance products to conceal the true cost of fund expense ratios and mortality expenses (annual fees deducted from the plan's assets).

Fees can be buried so that only professionals know how to find where "soft-dollars" are shifted between third parties. Too many in the industry have created word games in tiny print to define "disclosure," leading fiduciaries to believe they acted responsibly when, in reality, the hidden expenses have a corrosive effect on the participant's account. Participants have a right to know and understand the significance of every fee taken out of their account.

Many providers claim "no fee" 401(k) plans, meaning they do not charge a fee on top of the expenses built into the underlying mutual funds and insurance products. This typically occurs when those expenses are abnormally high. The provider may receive money through revenue sharing, but most funds that offer revenue sharing, by nature, carry higher expense ratios.

*Calculations based upon a $3,000,000 plan with 45 participants
⁴Source: Uncovering and Understanding Hidden Fees in Qualified Retirement Plans, 2nd Edition,
Matthew D. Hutcheson, MS, CPC, AIFA, CRC

Due solely to the reduction in fees, the participant earns an additional $201,877 or 36%