It might interest financial advisers to know that the fee results participants receive are compared to the fees in an IRA. Participants are told whether their fees are higher than average compared to a low-cost IRA and given projected savings of opening an IRA account.
The tool, available for free to registered participants at www.BrightScope.com, asks participants for their age and salary. It then asks participants to select a plan they contribute to and enter how much they contribute. If the plan is in the BrightScope database, it will list funds for participants to enter amounts next to.
The database then collects the data and presents the percentage fee the participant pays—as well as a comparison of those fees to an IRA. Participants can also view a more detailed report telling them the dollar and percentage cost of each fund in their lineup.
The service provides “unprecedented transparency,” said Mike Alfred, CEO and founder of BrightScope, a provider of independent retirement plan ratings and investment research, in a news release. “With a comprehensive database of more than 30,000 401(k) plans, we’re uniquely positioned to deliver a vital resource to millions of Americans unaware of how much of their retirement savings is going to fees each year.”