Service providers should be compensated reasonably, not benefit unfairly.
The Negative Effects Of Asset-Based Pricing
1. High asset-based fees hinder account balance growth.
Their Way
Most service providers determine their fees as a % of the account value. As investment income is earned, the participant’s account grows and plan fees continue to increase over time. This can reduce a participant’s account at retirement by 28%.
Our Way
FixedFee401k stops escalating fees by establishing fixed fees for advisory services and a flat fee per participant for recordkeeping services. All asset-based fees are eliminated, so participants keep more of what they save. This can grow the participant’s account balance faster over time.
A 1% difference in fees and expenses
can reduce a participant’s account at retirement by 28%.
“A Look At 401k Plan Fees”, U.S. Department of Labor, Employee Benefits Security Administration. Individual account accumulation over a 35 year period with a starting account balance of $25,000 and return on investment of 7%. Assumes no further contributions. This is a hypothetical example and is not representative of any specific situation. Results will vary.
2. Asset-based fees can represent significant salary $.
Example
| Participant 401k Balance | $300,000 |
| Average Industry 401k Fees | 1% |
| Participant Annual Salary | $50,000 |
| Participant 401k Fees | $300,000 x 1% = $3,000 |
| Participant 401k Fees As A % of Salary | $3,000 / $50,000 = 6% |
Their Way
Asset-based fees can produce unreasonably high fees as a % of salary as participants near retirement. These fees can be 5-10% of a participant’s annual salary.
Our Way
FixedFee401k stops this escalation in plan fees and participants keep more of what they save for retirement. Coupled with better participant advisory support, lower overall plan fees can contribute to better retirement outcomes.
3. Asset-based fees can exceed plan contributions.
Their Way
Participant 401k plan fees can be more than their 401k plan contributions. As participants near retirement, plan fees can exceed their plan contributions. Fees more than contributions? Does that seem reasonable?
Our Way
FixedFee401k sets fees at engagement and stops the ever increasing fees for participants. Fixed fees allows participants to keep more of what they have saved for retirement.
Example
| Participant 401k Balance | $300,000 |
| Average Industry 401k Fees | 1% |
| Participant Annual Salary | $50,000 |
| Participant 401k Fees | $300,000 x 1% = $3,000 |
| Participant 401k Contribution Rate | 5% |
| Participant 401k Annual Contributions | $50,000 x 5% = $2,500 |
4. Hidden fees hurt investment fund performance.
Their Way
Many service providers start with a pre-selected list of funds that include the necessary fees to compensate themselves. These fees are often “hidden” or difficult to find which can keep understanding low and questions few. This method of selecting plan funds can result in lower long-term performance and hinder participants’ account growth.
Our Way
FixedFee401k plan investments are selected from the broadest universe of low-cost high-quality funds. No conflicts of interest or hidden fees. We also act as the plan’s Investment Manager as defined under ERISA 3(38).
FixedFee401k can save participants 50% or more
Their Way
Compare industry average 401k plan fees to FixedFee401k. FixedFee401k fees are fixed while industry fees will increase as the plan assets grow over time.
Our Way
FixedFee401k sets a fixed fee for plan administrative and advisor services. Lower, fixed fees can give 401k participants a better chance at a successful retirement outcome.
Comparison of Industry Average Fees versus FixedFee401k
Fees shown are for illustrative purposes only. FixedFee401k fees assume no third party administrator.
We Believe Our Approach Is Unique In The Industry
Fixed Fees
We use fixed fees for plan administrative and advisory services giving participants a better chance at a successful retirement outcome.
Low Cost, High Quality Funds
FixedFee401k plans feature low-cost quality funds with no hidden fees. We don’t get paid to sell funds!
