Alfred acknowledges that there are higher operational costs associated with offering smaller plans, and advisors servicing those plans may not be able to leverage the efficiencies of larger advisory groups that share costs, with most smaller plan advisors managing just a few plans. Smaller plans may need more help since generally they have fewer, less sophisticated HR and finance professionals. And much of the cost for smaller plans includes the sales process, which can be cumbersome and expensive.
However, BrightScope notes that even though smaller plans are generally more expensive to administer, there are plans at all asset levels that are able to operate under 1% and even under 0.5%.