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Fees Matter in RK Changes, But Not as Much as…

A recent Cogent report suggests that fees are the most common reason for switching recordkeepers – but what do NAPA Net readers think?

Fees were certainly an important factor, according to the respondents to this week’s reader poll – but at 28% were a distant second to poor service, which drew the support of more than half (53%) of this week’s respondents. “Customer service,” noted one reader. “Sponsors are OK with not having ASAP answers, they just want confirmation that someone somewhere is working on their answer.”

That said, the remainder of responses indicated that the decision was the result of a combination of factors – and a number of those specifically cited that it was a combination of fees and poor service. In fact, nearly 8 in 10 of this week’s respondents acknowledged that the primary reason was not the only reason for the decision.

“Concern over quality of services, fees and experience of the team,” noted one reader. Another reader noted simply: “Did not work as advertised,” though whether that was a comment about technology, process or people is open to interpretation.

While arguably fees, service, and fees and service have long been factors in the decision to change recordkeepers, we asked this week’s respondents how – or if – those priorities had shifted over the past 12 months. A plurality (44.6%) of this week’s respondents noted that fees have, in fact, become more important, while nearly 28% said that they had become more important in some ways, but not for all plan sponsors.

Just under a quarter (24.7%) said that those priorities hadn’t changed, while the remainder said that fees had become less significant as a factor. Another reader said they were “seeing a bigger shift in plan sponsors looking at investment and advisory fees, used to just be the hard dollar fees from TPAs and recordkeepers that plan sponsors were looking at.”

How Much Saved?

In those cases where fees were an issue in the decision, we asked how much was saved with the change in recordkeepers. The results were varied – and telling:


  • 10-20% was cited by about a third of the respondents (31.25%)

  • More than 30% was cited by a quarter (26.3%)

  • 20-30% was the savings cited by 12.5%

  • Less than 10% were cited by 9.7%


The rest weren’t sure, or indicated that the savings varied outside those bands.

However, not every move resulted in fee savings, even where fees were a factor in the change. One reader explained that, “Of the last 12 RK RFPs we have conducted, fees were not the top factor in their decision. A few of the changes actually saw an increase of fees but also a material increase in services.” Another reader noted that “in two cases fees went up but the service was so bad that the plan felt they had no choice.”

Other Comments

“Many sponsors are cognizant of RK consolidation and how that has negatively affected the service level and tech spend at certain recordkeepers.”

“My clients would always prefer to pay for good service.”

“For the majority of our plan sponsors, they were hit in the past year or two with fees associated to the amendment and restatement for PPA, as well as their normal administration costs. I can understand their frustration with the additional fee for the restatement, but have explained that this is a required update and it will not occur again until 2020.”

“With some recordkeepers, they're just as bad as the cable companies – they get plans in there at a great price, then over the years the cost goes up. Years later when we request a new proposal because two other recordkeepers are coming in with much lower fees, they don't even try to come back to compete!”

“Fees are definitely important but we try to focus on the relationship as a whole. The old saying you get what you pay for comes to mind.”

“As important as fees have become in the decision making process, it almost always comes down to service, or lack of, that drives the decision to change, followed by improved capabilities as a close second,” noted one reader. “Only then are fees an issue; is the benefit we receive worth the fees that are charged?”

Thanks to everyone who participated in our weekly NAPA Net reader poll!

Got a burning question on your mind? Something you’d like to run by the NAPA Net readership? Post it in the comments section below – or email me at [email protected].

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