Data & Research February 26, 2013

401(k) Plan Fees Declining

Retirement plan costs have declined over the past year, according to figures from the 401k Averages Book.  
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The average total plan cost for a small retirement plan (50 participants/$2,500,000 assets) declined from 1.47% to 1.46% over the past year, while the average total plan cost for a large retirement plan (1,000 participants/$50,000,000 assets) declined from 1.08% to 1.03% over the past year, according to the 13th edition of the 401k Averages Book.

The study shows the small plan average investment expense went from 1.38% to 1.37%, while the large plan average investment expense declined from 1.05% to 1.00%. The term “investment expense,” for the purposes of the book, represents any asset based charges applied to plan assets. To the extent that investment management fees, fund expense ratios, 12b-1 fees, sub-transfer agent fees, contract charges, wrap and adviser fees or any other asset based charges are a part of a particular product in the database, they are included in the “investment expense” of that product. Thus, by extension the average “investment expense” calculation includes all of the above charges, Joseph Valletta, co-author of the 401k Averages Book, told PLANADVISER.

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The average total expense for a small plan is 1.46%, but the range between the high and low total plan expense is .38% to 1.97%.

“401(k) fees have been trending down over the years but the Department of Labor's fee disclosure regulations helped bring a great deal of attention to 401(k) plan fees,” Valletta said. “More plan sponsors and their advisers recognize the importance of plan fees and the wide range of fees in the marketplace.”

This edition of the 401k Averages Book separates target-date funds (TDFs) from traditional balanced and risk-based funds. “Since target-date fund usage continues to grow in 401(k) plans, we thought it was important to calculate the average cost of target-date funds available within 401(k) offerings," said David Huntley, co-author of the 401k Averages Book.

The study found that the average TDF expense for a large plan is .98%, while the balanced fund average is 1.12%. The average TDF expense for a small plan is 1.37%, while the balanced fund average is 1.45%.

More information about the methodology behind the 401(k) Averages Book can be found here. The 13th edition is available at http://www.401ksource.com.

 

Deals & People February 26, 2013

Benefit Advisors Selects Trinity as New Member

Trinity Consulting has been accepted for membership in Benefit Advisors Network (BAN).
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BAN is a national network of independent benefit advisory and consulting companies. To become a BAN member—or to become a Smart Partner—Trinity Consulting had to pass a stringent screening process that included interaction with BAN’s members and its board, as well as an examination of the firm’s business ethics, industry knowledge and commitment to providing the highest quality services.

Charlotte, North Carolina-based Trinity Consulting, founded in 2001, has 28 employees and approximately $6 million in revenue. Trinity’s geographic reach extends through North and South Carolina and Georgia.

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Trinity caters to the employee benefit needs of the middle market, which it defines as companies with 50 to 1,000 employees. The company also works in the benefit space, as well as property and casualty and 401(k) arenas. In addition, Trinity specializes in meeting the needs of those firms in the construction and manufacturing industries.

“We really believe [BAN’s] business-planning tools and client resources will enhance our firm’s continued growth, particularly over the next three to five years,” said Harry Floyd, Trinity co-owner and vice president.

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