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Small Business 401(k) Blog

The Frugal Fiduciary Small Business 401(k) Blog

Get the latest industry news, deadlines and tips you need to know to help tackle your fiduciary responsibility needs.

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Provider Shopping | 401(k) Studies | Financial Advice | Fiduciary Responsibility

401(k) Fee Study: What Does a Fiduciary-Grade Advisor Cost?

By: Eric Droblyen
August 7th, 2019

When an employer is looking to hire a financial advisor for their 401(k) plan, my advice to them is always the same – only consider financial advisors subject to a fiduciary standard of care. My reason is simple - only fiduciary-grade advisors are obligated by law to give impartial advice. In contrast, non-fiduciary advisors can give conflicted advice that favors investments with high commissions – making it harder for employers to keep their 401(k) fees in check. Generally, investment advisers are subject to a fiduciary standard of care, while brokers and insurance agents are not.

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Investments | 401(k) Fees | Provider Shopping | Fiduciary Responsibility

Revenue Sharing - 5 Reasons for 401(k) Fiduciaries to Avoid it

By: Eric Droblyen
July 24th, 2019

All 401(k) plans require three basic administration services – asset custody, participant recordkeeping and Third-Party Administration (TPA). A 401(k) provider can be paid “direct” or “indirect” fees from plan assets to deliver these services. Direct fees are deducted from participant accounts, while indirect fees are paid by plan investments. The most common form of indirect fee is revenue sharing. Below are five reasons why employers should pay direct fees for 401(k) administration services instead.

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401(k) Plan Design Checklist

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Subscribe to the The Frugal Financial Small Business 401(k) Blog and receive this free checklist for help in determing the best 401(k) plan design options and fit for your company.

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401(k) Fees | Provider Shopping | Plan Setup

Switching 401(k) Providers? What to Expect and Pitfalls to Avoid

By: Eric Droblyen
June 26th, 2019

If your 401(k) provider is an insurance, mutual fund or payroll company, there is a good chance your 401(k) fees are too high. If you’re a business owner, you have the power to lower them, but you may need to switch 401(k) providers to do it. This move can seem daunting if you have never done it before.

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Provider Shopping | Plan Setup | Fiduciary Responsibility

Employers Must Avoid 401(k) Providers They Can't Understand

By: Eric Droblyen
June 12th, 2019

One of my favorite Warren Buffet investing principles is “never invest in a business you cannot understand.” I think the rule of thumb is helpful in mitigating risk. If you’re a small business owner, I recommend you extend this principle to managing your 401(k) plan – never hire a 401(k) provider you cannot understand. What you don’t know about your provider can hurt plan participants and increase your fiduciary liability

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Investments | 401(k) Fees | Provider Shopping | Fiduciary Responsibility

401(k) Mutual Funds – Pay Attention to Share Class!

By: Eric Droblyen
May 1st, 2019

Mutual fund companies usually make their funds available to 401(k) plans in multiple share classes. While all classes hold the same underlying securities, they can charge very different fees. In general, employers have a fiduciary responsibility to choose the lowest-priced share class available to their 401(k) plan – so participant investment returns aren’t reduced unnecessarily by avoidable fees.

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401(k) Fees | Provider Shopping | Fiduciary Responsibility

It's Too Easy to Conceal 401k Fees – We Need 408b-2 Reform

By: Eric Droblyen
April 17th, 2019

In multiple lawsuits, Fidelity Investments is being accused of charging excessive, undisclosed 401(k) fees. At issue is an “infrastructure fee” the company demands from some third-party mutual funds in return for access to Fidelity 401(k) clients. Fidelity claims the fee is not 401(k)-related. The lawsuits claim otherwise, saying the fee represents indirect compensation – a form of 401(k) fee that must disclosed in a 408b-2 fee disclosure to be legal under the Employee Retirement Income Security Act (ERISA).

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