11.12.2023 03.30 CST

Recent court decision reiterates that provider fees are reasonable only of fiduciaries understand all income received by a provider as the result of providing services to a plan.

Court of Appeals Focuses on Indirect Compensation

Court of Appeals Focuses on Indirect Compensation

The U.S. Court of Appeals for the Ninth Circuit recently clarified fiduciaries’ obligation to consider all revenue received by a provider—even indirect revenue from third parties. The ruling relies heavily on 2012 DOL regulations and could prompt fiduciaries to be more insistent in obtaining comprehensive disclosure from providers on all their sources of income.

19.11.2018 08.31 CST

A number of long-term market trends are creating significant pressure on bundled recordkeepers’ revenues. The recordkeepers are responding to these revenue pressures through a variety of ways that impose additional costs on plans and participants.

Fee Compression: Fiduciaries Take Note

Fee Compression: Fiduciaries Take Note

Retirement plan recordkeepers are seeing ongoing pressure on fees. Their approach to developing alternative revenue sources could have implications for plan fiduciaries.

Revenue for “bundled” recordkeepers have been facing downward pressure for years--both on recordkeeping fees and asset management fees. Over the past decade recordkeeping fees have dropped 50 percent and investment fees paid by 401(k) plans have dropped by 38 percent over a similar period. These bundled recordkeepers are looking to fund managers, plans, and individual participants to compensate for this decline. The recordkeepers’ search for new revenue sources can create challenges for plan fiduciaries and sponsors and should be monitored closely.