Frequently Asked Questions
What is FeeMetri(k)s™?
FeeMetri(k)s™ turns 401k decision-makers into fee experts in under 5 minutes by giving them the data and analytics they need to know exactly what other comparable companies are paying across the industry. With unparalleled fee transparency and real-time pricing intelligence you won’t find anywhere else, FeeMetri(k)s™ arms you with the data you need to make informed decisions, negotiate the best deal for your employees and manage your fiduciary risk so you keep your company and yourself out of legal trouble. With FeeMetri(k)s™, you’re in control and you’ll never get “sold” a high-cost 401k plan by the retirement industry again.
Why does my company need to be concerned about the fees in our retirement plan?
Three reasons. First, 401(k) litigation is exploding and more companies are being sued by participants claiming fiduciaries have breached their duties under ERISA by failing to make prudent fee decisions resulting in participants paying excessive fees. Second, fee have been shown to be the most reliable predictor of future investment returns. In fact, in a 2010 study entitled “How Expense Ratios & Star Ratings Predict Success”, Morningstar concluded that “investors should make expense ratios a primary test in fund selection. They are still the most dependable predictor of performance.” Third, 401(k) fees can have a dramatic impact on participants’ account balances and retirement income over time. For instance, in the publication “A Look At 401(k) Plan Fees”, the DOL has estimated that a 1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent.
What are some examples of 401(k) fee lawsuits?
A Companies like Lockheed Martin ($62m settlement), Boeing ($57m settlement), Caterpillar ($16.5m settlement), Walmart ($13.5m settlement), Mass Mutual ($31m settlement), International Paper ($30m settlement), Ameriprise Financial ($27.5m settlement), Fidelity ($12m settlement), Anthem (currently in litigation), Oracle (currently in litigation), and many others have either settled or are currently engaged in lawsuits related to excessive fees. St. Louis law firm Schlichter, Bogard & Denton has won over $300m in settlements against plan sponsors over the past decade by itself.
Why are 401(k) fees difficult to benchmark and why should my company consider using FeeMetri(k)s™?
ERISA (the law that governs qualified retirement plans) has always required that plan fiduciaries ensure that 401(k) fees are reasonable in light of the services being provided. Unfortunately, plan fiduciaries have often had trouble fulfilling this requirement for two reasons. First, the retirement industry has done a terrific job of making fees hard to decipher and understand. The second problem has been an overall lack of accessibility, accuracy and meaningful context in regards to 401(k) fees. Form 5500 data is typically outdated and incomplete, fee disclosures (commonly known as 408(b)(2) statements) are too often confusing and complex, indirect compensation such as revenue sharing can misrepresent who is receiving compensation and to what extent, and the process of finding meaningful comparisons is difficult and time-intensive. FeeMetri(k)s™ solves these problems for you in three ways. First, it provides a breakdown of your plan fees in a simple, easy-to-understand format so you know exactly who is getting paid, how much and from what sources. Second, it puts this information in context with 8 key comparison metrics that show how your fees compare to other similarly sized plans, allowing you to make smarter decisions. Third, you can take periodic snapshots (monthly, quarterly or annually) to see how your fees trend over time and demonstrate a documented process that helps you fulfill your fiduciary duties under ERISA.
How is Feemetri(k)s™ different than other fee benchmarking solutions?
Though few similar tools currently exist, the ones that do in most cases lack accurate, real-time data and comparison metrics to make the information useful and actionable. For example, if you read the fine print of these solutions you will often find that the information is not based on actual real-time plan data but on plan sponsor surveys, requests for proposal, standard provider fee schedules or Form 5500 data that is incomplete or out of date. FeeMetri(k)s™ actually provides extensive, real-time data submitted by plan sponsors and uses comparison metrics you won’t find anywhere else which empowers you with the insights and analytics you need to make better decisions for your people and your company. FeeMetri(k)s™ also provides the ability to create historical snapshots so you can track how your fees change and you can document a sound and consistent fiduciary process over time.
What comparison metrics does FeeMetri(k)s™ provide?
FeeMetri(k)s™ provides 8 different comparison metrics based on comparable sized plans in terms of total assets and number of participants. These comparisons include fund fees, administrative fees (e.g. recordkeeping, administration, compliance and custody), advisory fees (if applicable), provider firm fees (e.g. Vanguard, Fidelity, T. Rowe Price, etc.), advisory firm fees (e.g. Merrill Lynch, Morgan Stanley, UBS, etc.), industry and region. The provider firm and advisory firm fees are especially powerful and unlike anything else in the industry. For example, if you use Fidelity as your provider you will be able to see how your fees compare to all other similar plans in the database that use Fidelity as a provider. This level of detail empowers you with the data you need to negotiate with your vendors more effectively, increase accountability and make better decisions for your people and your company, leading to better outcomes over time.
Why should my company pay for FeeMetri(k)s™ rather than using free tools that may exist?
Because you get what you pay for. If the data you are using is outdated, incomplete or inaccurate your efforts and outomes will be ineffective. Also, if anybody is benchmarking your plan for "free" they are either using your data to make money or trying to sell you something (nobody works for free!). FeeMetri(k)s™ provides the most extensive, real-time data submitted by plan sponsors and uses comparison metrics you won’t find anywhere else and that you can monitor on a historical basis. The result is you can always quickly and easily be sure your fees are competitive with the marketplace, you can document a sound and consistent fiduciary process and you can leverage the data and insights to make better decisions for your people and your company, leading to better outcomes over time.
How many users from my company can access our plan summary portal?
Your company may provide access to your plan summary portal to an unlimited number of users. We typically recommend that plan fiduciaries, such as retirement plan committee members, and finance/operations/HR leaders be given access. Essentially, anyone who is in a position of influence or has fiduciary responsibility for the plan.
Should we give access to our participants?
Access is not recommended for plan participants. However, we are working on functionality that will enable participants to easily see and understand the fees they are paying in their own individual account. Stay tuned!