To provide plan sponsors and fiduciaries with greater insight, Fiduciary Decisions (FDI) on Nov. 7 announced that it has developed a new report that benchmarks comprehensive metrics for managed accounts within retirement plans.
According to the firm’s announcement, the benchmarks give retirement plan sponsors verified and independent metrics to assess their managed account structure and performance and fulfill their fiduciary obligations.
More than a year in the making, the report is based on FDI's patented method of making sure that fees are always considered in conjunction with value. To that end, the firm notes that value for managed accounts consists of:
- the quality of the managed account provider;
- the services they deliver;
- the value expressed in terms of participant success measures and engagement; and
- the extra services priced at market-based rates.
Numerous lawsuits have claimed that managed accounts are simply expensive "target date” funds. To help address this, the FDI report makes direct comparisons of saving, investing and spending metrics for three distinct types of participants:
1. Managed accounts participants
2. Target date fund participants
3. Do-it-yourself participants
The FDI report also contains information for plan fiduciaries by quantifying how much income would be replaced by each one of the three distinct offerings and participant types.
“It is not an easy job being a fiduciary, especially for larger plans that have been the target of fee lawsuits,” Tom Kmak, CEO and co-founder of FDI, said in a statement. “We believe our independent, comprehensive and informative report will help fiduciaries understand the reasonableness of the fees they are paying their Managed Account provider by thoroughly examining what they are getting for what they are paying, which is completely consistent with ERISA, the regulations and the case law.”
Founded in 2008 at a time when growing litigation and regulation was leading to commoditization and a focus on fees rather than fiduciary performance—an environment that continues today—FDI created its patented Quality, Service, Value and Extra Credit construct to give the retirement industry a means to communicate fee reasonableness and improve outcomes for retirement plans and participants. FDI works with many of the industry’s largest recordkeepers, broker/dealers, advisor/consultants and plan sponsors.
