Warren Buffet may have said it best - “Price is what you pay. Value is what you get.” Fee Reasonableness is the intersection where fees and value meet.
As a Plan Sponsor, it is your fiduciary responsibility to only pay reasonable fees. The challenge is determining what is “reasonable”.
Quality + Service + Value + Extra Credit.
is the QUALITY of the provider,
stands for the SERVICES it is delivering,
for the VALUE it supplies, and then
is for EXTRA CREDIT it may be providing
For example, if an Advisor is charging more than the median fee but, they are providing exceptional Quality, Service and Value then their fees may be reasonable. For instance, if a plan serviced by an Advisor maintains high participation rates, healthy deferral rates and is structured to generate strong retirement outcomes, then their level of Quality, Service, Value and Extra Credit may very well support a higher fee being charged.
For 401(k)s and other workplace retirement plans, it is the responsibility of the plan fiduciary. Often, the plan fiduciary will receive assistance from their service providers.
Fiduciary Decisions provides the industry’s most comprehensive Defined Contribution Plan Benchmarking service.
And there is so much more! Schedule a meeting to learn how FDI Plan Sponsor solutions can help you determine fee reasonableness.