Using a Benchmark to Track Fiduciary Fees

Save America, Save - A Financial Services Podcast with Charlie Epstein

On this installment in my series—based on my book, “Save America, Save!”—we’re talking about getting a benchmark analysis. One of the keys to being a great plan sponsor fiduciary is ensuring that the fees that you pay in your plan are reasonable. Who and how do you define “reasonable?” Under ERISA, the only way you know if your fees are reasonable is to benchmark them against other expenses. So, you’ve got a record keeper, you might have a third-party administrator, and you’ve got an advisor. These are the people you are paying for their services. You need to understand who the providers are and what services are they providing, and what are the fees that they are charging for those services? Who’s acting as a fiduciary and is there a conflict of interest? So the best way to determine if the fees those individuals are charging are reasonable is to benchmark against other plans,other record keepers, and other advisors. This can be complicated because you need accurate data from the others in order for this to work. “You need accurate data to create a solid benchmark.” As Epstein Financial Services, we have a very simple vendor benchmark of services that we want to offer to you free of charge that will help you determine if your fees are reasonable. What we do is we look at a universe of retirement plans that have similar characteristics to yours— plan size, number of employees and investments, and any other data. We then reach out across the country and pull data from other plans in order to create a benchmark for you. If you’d like to learn more about getting your own free benchmark or you have any other retirement questions, please call us or shoot us an email. We’d be happy to help!