Managing Plan Fees
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Consumer protection laws have increased the burden on employers, to ensure that plan fees and related services are “reasonable.” This increased responsibility, while beneficial for plan investors, has made it more important for employers to understand fee disclosure documents, and validate the level of fee-reasonableness charged by their service providers.
And regardless of the legal requirement to manage expenses, it is simply good practice for employers to help participants achieve good investment outcomes.
Economists predict that the investment returns of the 1980s and 1990s are unlikely to be repeated in the near future. So, the days of double-digit annual returns from the stock market, are expected to be less frequent.
In a low-return environment, controlling investment expenses is even more crucial for investment success. After all, investment returns are eventually reduced by taxes and inflation, not just expenses. And while you cannot control taxes or inflation, you do have some control over expenses.