American Funds decided to offer fiduciary services to plan sponsors but is not profiting from the service; plans pay a minimal fee to Wilshire Associates directly. For plans with fewer than 25 participants using the 3(21) service or the 3(28) service, the annual charge is $300 and $600, respectively. For plans with 26 to 300 participants, the annual charge is $500 and $700, respectively, and for plans that have 301 to 500 participants, the annual charge is $600 and $1,000.
American Funds launched the
service last summer, “in response to advisers’ request for third-party
services,” said Bill Anderson, senior vice president and director of retirement
business at the firm.
“We did a search for an independent third-party fiduciary, examining their core values and methodology,” Anderson said, “and ultimately started the program with Wilshire Associates. We receive no compensation from plan sponsors or Wilshire but are offering this as a convenience to our plan sponsor and plan adviser clients. We think it represents a value.”
Asked what the reaction among clients has been, Anderson says it has been very
positive. “Many advisers will provide this service themselves, but given the
heightened sensitivity to fiduciary obligations, many plan sponsors and plan
advisers have been interested in this,” he said.
As of July 9, 212 plans are making use of American Funds’ independent fiduciary offering from Wilshire. Of these, the majority, 136, have elected 3(21) services, with the remainder, 76, electing 3(38) services.