Lower Fund Share Classes Offer Opportunity for Experienced Plan Advisors

What’s driving cost cutting by mutual funds offered to retirement plans? Some might say disclosure, but there may be other drivers at work, like technology and market pressure. Many of the administrative and record keeping fees are buried in fund expense ratios, which can make these fees seem high. But the market is becoming more transparent — driven not just by the DOL disclosure rules, but also by plan sponsors and advisors who want to pay each vendor directly for what they actually do. Thanks to improvements in technology, record keepers and advisors can be compensated more easily out of plan assets than out of fund fees. As discussed in the Tussey case, plan sponsors are under pressure to select the lowest share class available. With lower share classes now available, savvy plan advisors will look for plans that are not taking advantage of these price cuts, thus wasting money and exposing their fiduciaries to increased liability. Read more here.