September 17, 2012
Investment Company Institute and Deloitte Consulting LLP have found total fees
for defined contribution (DC) plans were lower in 2011 than in 2009. ---
Totaling all administrative, recordkeeping and investment
fees, the median participant-weighted “all-in” fee for plans in the 2011
Defined Contribution/401(K) Fee Study was 0.78%, or approximately $248 per
participant. The data suggest that the participant at the 10th percentile was
in a plan with an “all-in” fee of 0.28%, while the participant at the 90th percentile
was in a plan with an “all-in” fee of 1.38%.
The median participant “all-in” fee of 0.78% of assets in
the 2011 Fee Study is lower than that observed in the 2009 Fee Study, which was
0.86% of assets. The companies said there are a number of factors that may
contribute to the decline in the ‘all-in’ fee between the 2009 Fee Study and
the 2011 study.
These factors include different samples of plan sponsors; a
larger survey population (over four times as large); different asset
allocations (some driven by market performance between the two years); and
different fee structures within the industry.
One reason for the lower median “all-in” fee in the 2011 Fee
Study versus the 2009 Fee Study may also be related to the relationship between
asset-based fees and non-asset-based fees. When plan asset information was
collected in the 2009 survey, investment markets had just experienced the
turmoil of the financial crisis of late 2008. Since that time, financial
markets have rebounded and total plan assets have grown. As deﬁned contribution
plan assets grew, the non-asset-based fees would have been spread out over a
larger asset base, causing them to fall as a percentage of assets.