Data & Research March 16, 2016

401k Averages Book Sees DC Plan Fees Down Another Notch

A single basis point drop in the average U.S. retirement plan fee may not seem that significant, but magnified across hundreds of billions in assets it represents an important win for plan participants. 
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The average total plan cost for a small retirement plan with 100 participants and at least $5 million in assets declined from 1.29% to 1.28% over the past year, according to the 16th edition of the 401k Averages Book.

Published since 1995, the 401k Averages Book strives to be an affordable-but-useful information tool to help retirement plan industry providers and clients do effective benchmarking and make comparative plan design decisions.

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The 2016 update shows the average total plan cost for large retirement plans—with at least 1,000 participants and $5 million assets—declined even more than for small plans, from 1.03% to 0.97%.

“On average 401k investment fees continue to decline in both the small and large plan market,” explains David Huntley, co-author of the 401k Averages Book, calling the findings very encouraging. “401(k) fees have been trending down for years [since 2010] and plan participants have benefited because of it. The research shows how the average total plan cost for a 100 participant plan has decreased from 1.33% in 2010 to 1.28% in 2015.”

Stripping out administration and other costs, researchers find the average investment cost for a small retirement plan declined from 1.22% to 1.21% over the past year, while the average investment cost for a large retirement plan declined from 1.01% to 0.95%. Also important to note, even amid the serious year-over-year fee compression, there “continues to be an uptick in 401(k) lawsuits, and some have targeted revenue sharing as well as other fiduciary issues.”

Joseph Valletta, the other co-author of the 401k Averages Book, explains revenue sharing itself is not a harmful or illegal practice, but “when a sponsor does not know how much revenue sharing is generated, how it’s used or how it compares with industry peers, that might cause issues.” He observes that small plans currently generates 0.66% of revenue sharing, while a large plan generates 0.40%.

The 16th edition of the 401k Averages Book is available for $95 and can be purchased by calling (888) 401-3089 or online at www.401ksource.com. 

Products March 16, 2016

Wells Fargo Allows Mobile 401(k) Plan Reallocations

Participants will be able to change how their current balance and future contributions are invested among their 401(k) plans' available investment options.
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Wells Fargo Institutional Retirement and Trust announced enhanced mobile capabilities that will allow participants in 401(k) plans administered by Wells Fargo to make investment elections for their 401(k) accounts from a mobile device.

Participants will be able to change how their current balance and future contributions are invested among their 401(k) plans’ available investment options. This includes the ability to reallocate both current balance and future contributions in one transaction using the same investment elections.

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This is the latest in a series of recent mobile technology updates made for the benefit of participants in Wells Fargo-administered plans. Last year, the company gave mobile users the ability to monitor investment performance, personal rate of return and portfolio mix from a personal device. In addition, Wells Fargo introduced an “Easy Enroll” option that allows eligible employees to enroll in their 401(k) plan with just a text message and a few clicks, leveraging the Wells Fargo text banking platform.

“Many of our participants prefer to conduct transactions on their mobile devices. Now, participants can have more flexibility to manage their 401(k) accounts on their smartphones—whether that’s enrolling in the plan through ‘Easy Enroll,’ changing their contribution rate, rebalancing their account balance or directing how their future contributions will be invested,” says Joe Ready, head of Wells Fargo Institutional Retirement and Trust.

Other recent enhancements to the digital participant experience include redesigned desktop and tablet transaction pages for investment transfers and payroll deduction changes. The redesigned pages give participants a consistent experience across all channels, making it easier and quicker to make updates, Wells Fargo says.

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