Retirement plan participants could save $12.3 billion by switching to lower fee investments, according to RiXtrema, a New York City-based firm that provides risk management tools and analysis for financial advisors and broker-dealers

In an effort to help advisors and broker-dealers measure potential loss in excessive fees, RiXtrema launched the 401kFiduciaryOptimizer, software that quantitatively compares and converts existing retirement plan menus into proposed, lower fee, better diversified lineups.

“For some time, pressure has been building on plan sponsors to address the issue of fee waste in qualified plans,” says Daniel Satchkov, RiXtrema president. “With the new DOL fiduciary rule, this pressure is being applied to the financial advice industry as a whole. We undertook this research because we recognize the need for rigorous quantitative evidence to show how much retirees are overpaying in 401(k) plans.”

RiXtrema analyzed 7,472 retirement plans and determined plan participants could save at least 44 basis points a year by switching into lower cost investments that are quantitatively very similar to those they already hold. With 401(k) plans totaling $2.8 trillion, a total savings of $12.3 billion could be realized, RiXtrema says.

“The goal of the research was to find a low-fee replacement for high-fee funds, but only where it could be proven that the replacement does not materially change the risk-return profile offered to participants in their current menu,” says RiXtrema.