Acropolis is generally able to reduce client fees by about a third, he says. It was even able to help a large health care company it started working with several years ago cut its fees by two-thirds-from approximately $663,000 to $232,000 on a plan with total assets of $36.4 million.
"The advisor fees were just wildly expensive," says Lissner. The plan's former provider, a broker who was a good friend of the key trustee, had the business for over 20 years and was taking advantage-a scenario Lissner says is all too common. The other trustees were reluctant to out-vote their colleague until they saw how much more expensive the broker was than several other firms.
To get a clearer picture, Acropolis helped the company break out its custodial fees (which had been baked into the fund fees) and its educational fees (hidden in the financial advisor charges). Acropolis helped the company cut its record-keeper fees by 33% by introducing it to an online provider with a low cost structure. That record-keeper is now doing some more work under the new fee disclosure rules and increasing its fees by about 10%, notes Lissner.
Beyond The Basics
Marcia Wagner, a specialist in ERISA/employee benefits law and founder of the Wagner Law Group in Boston, points out that there are many hidden fees in 401(k) plans including investment management fees, revenue-sharing arrangements, soft-dollar commissions and sub-transfer agency fees.
"A good financial advisor will tease this out of the new fee-disclosure forms," she says. "It won't be intuitively obvious to many plan sponsors."
Wagner notes that vendors must disclose fees and plan fiduciaries must check if they're reasonable. "A good advisor can bring these worlds together," she says. A couple of benchmarking providers include Fiduciary Benchmarks and Castle Rock Innovations.
"Having [knowledge of] fees is only half the battle-it's what you do with the fees," says Wagner. She has created fee policy statements that her financial advisor clients use with their clients. This written protocol includes such considerations as what plan sponsors will pay for and why, what parameters will determine whether a fee is not reasonable and what actions will be taken if this is the case.
How can advisors get a jump on the competition? Lissner suggests checking out sources such as FreeERISA and BrightScope to learn more about specific 401(k) plans. Advisors can differentiate themselves by offering education to their clients, he says-and he suggests keeping it simple to generate the best outcomes.
AEPG has an ERISA attorney speak to its clients' employees every couple of years as a value-added service. Kaye says this can be done live or via Skype or WebEx. AEPG also offers its 401(k) clients its "Advisor on Demand" option, which enables plan participants to sign up for a half hour consultation with a certified financial planner.
AEPG shares best 401(k) practices with other advisors and offers to partner with them to help them in this increasingly regulated space. It has also held educational sessions for CPAs and attorneys. As Kaye sees it, "Going the route of transparency and clarity is the best fiduciary practice."