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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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Revenue Sharing | Fiduciary Responsibiilty | 401(k) Fees | Provider Shopping | Plan Setup

The Top 4 Lies Told by 401(k) Providers

By: Eric Droblyen
March 22nd, 2017

After the death of his beloved mother, Harry Houdini was desperate to contact her from beyond the grave with the help of psychic mediums – who claimed an ability to communicate with the dead. Mediums were very popular at the time, but it didn’t take long for Harry to discover they couldn’t do what they promised. Upset, Harry became determined to expose their lies to protect unwitting customers. Like mediums, some 401(k) providers make false claims. Their lies can easily go unnoticed to 401(k) fiduciaries due to the highly-technical nature of 401(k) services. However, believing these lies – and hiring the provider that makes them – can trigger severe consequences. They often mask excessive 401(k) fees or a lack of expertise that can increase fiduciary liability. If you’re a 401(k) fiduciary, identifying 401(k) provider lies is imperative to mitigating your plan liability. The good news? Most are easily debunked with some basic facts. I’d like to channel (pun intended) Harry Houdini by exposing four of the most common lies told by 401(k) providers today.

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Revenue Sharing | 401(k) Fees

Finding Hidden 401(k) Fees in Participant Disclosure Notices

By: Eric Droblyen
February 8th, 2017

In a 2015 study of 4,368 retirement plan participants, the National Association of Retirement Plan Participants (NARPP) found that 89% could not correctly calculate their account fees.  Even more disturbing, only 42% knew they were paying fees at all.  Most plan participants – 58% - were unaware that fees were being “automatically” deducted from their account.

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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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Revenue Sharing | 401(k) Fees | Provider Shopping

Asset-Based 401k Admin Fees Are Unreasonable; Fiduciaries Should Avoid Them

By: Eric Droblyen
October 19th, 2016

20 years ago, 401k plans were free. OK not really, but 401k providers used this lie a lot to sell 401k plans to small businesses that didn’t want to pay any out-of-pocket 401k fees. In truth, these plans paid “indirect” fees - like revenue sharing paid by mutual funds and/or wrap fees paid by insurance company variable annuities – to 401k providers based on a percentage of plan assets.   

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Revenue Sharing | 401(k) Fees | Provider Shopping

3 Questions for Calculating Small Business 401k Provider Fees

By: Eric Droblyen
October 5th, 2016

Small businesses have a fiduciary responsibility to pay only reasonable 401k plan fees. The problem? Too many 401k providers bury their fees in complex disclosure documents. When 401k fees are hard to find, it can be easy for 401k fiduciaries to pay too much for 401k services. When this happens, participant returns are handicapped unnecessarily and fiduciary liability is increased.

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Revenue Sharing | 401(k) Fees | Provider Shopping | 401(k) Studies

(Possibly) The Biggest Small Business 401(k) Fee Study Ever!

By: Eric Droblyen
August 24th, 2016

Meaningful 401k fee data is hard to come by – and that’s a big problem for small businesses. Sponsors of small business 401k plans have a fiduciary responsibility to keep 401k fees reasonable for plan participants. When this responsibility is not met, the consequences for 401k fiduciaries can be severe - including personal liability.

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Revenue Sharing | 401(k) Fees | Provider Shopping

John Oliver Should Be Upset; His Hancock 401k Fees Are Too High!

By: Eric Droblyen
June 29th, 2016

Recently, John Oliver lambasted the 401k industry and his own 401k plan with John Hancock on his HBO show Last Week Tonight. If you haven’t seen this show segment, you should check it out now - it was educational as well as hilarious. John Oliver’s main beef with his company’s John Hancock 401k plan was its annual fees - 1.69% of plan assets + $24/participant – which he considered excessive.

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