How low is too low—especially with fee compression? The old industry joke is that fees will compress to a point where recordkeepers will eventually pay participants rather than the other way around. Yet, recent legislation means more is needed (and expected) from recordkeeping services, which are services that cost. So, how is the right balance struck?
It’s a complicated question, one with which Bonnie Treichel wrestles. 
“We have all these competing interests right now,” ERISA expert Treichel, Chief Solutions Officer with Endeavor Retirement, said. “Recordkeepers have fewer dollars due to fee compression over the past few years. Yet we have SECURE 1.0, SECURE 2.0, and the CARES Act. We need recordkeepers to do more and help with more. Plan sponsors need more but there are fewer dollars to do it.”
Add in the cross-selling of managed accounts, rollovers, and proprietary funds; that complicated question is even more so. What’s the advisor’s role in all of it, or is it even part of their role? If so, what, specifically, should they point to with their plan sponsor clients?
“We still have to benchmark and monitor fees, but we need more from the recordkeepers,” Treichel explained. “At the same time, are there conflicts or perceived conflicts in cross-selling? So, a more comprehensive value discussion must happen and how much of it is the advisor’s role? We need recordkeepers to make enough money to have the right service people to help plan sponsors and participants. I feel like we’re at a turning point. How much do we push for lower fees versus needing more recordkeeper value?”
The answer, she says, is to no longer sell on lowering a plan sponsor’s recordkeeping costs but rather on overall value.
“We need the recordkeepers to have the right people in place in all market segments to help plan sponsors when they have questions,” she reiterated. “The recordkeepers need money to update technology for SECURE 2.0 and things like retirement income. These are costly. So, it’s not just pushing for lower fees to win business. When you’re going to the plan sponsor and saying, ‘Hey, I can get you lower recordkeeping fees,’ that’s not really the answer. That might actually have a worse result in the long run.”
It’s a discussion Treichel will continue at the 2024 NAPA 401(k) Summit on April 7 – 9 in Nashville, Tenn.
She’ll be part of an all-star panel titled Impact “Ed”: Elevating Strategic Plan Committee Conversations to Make an Impact on What Matters Most to Employees.
More specifically, the most engaged plan fiduciaries move beyond the basics of FFF (fiduciary, funds, and fees) to an enhanced strategic framework focused on building workforce financial resilience. She and her high-profile industry co-presenters will discuss:
- How to enable forward-thinking, collaborative discussions with plan fiduciaries that improve employees’ financial security and retirement outcomes.
- Ideas for building actionable strategies into plan committee meetings that leverage the convergence of wealth, health and retirement and personalization of benefits.
- Ways to contribute to the organization’s board governance goals, including CSR (corporate social responsibility), DEI&B, and risk management such as cyber security.
Moderator
Deana Calvelli, CEBS, CPFA®, AIF®, Workplace Retirement Consultant, Calvelli Consulting
Participants
Kim Cochrane, QPA, Director, Retirement Services, HUB International
Jason Chepenik, CFP, Senior Vice President, Retirement & Wealth, OneDigital
Bonnie Treichel, Chief Solutions Officer, Endeavor Retirement
