PLANSPONSOR - February/March 2018 - 56

INVESTMENT FOCUS
What Lower Fees Reveal
I
As investment and recordkeeping costs retreat, questions arise
n managing their defined contribution
(DC) retirement plans, plan sponsors,
for years, have been waging war on
two fronts-on the first, trying to boost
employee engagement and raise participation
and contribution rates, and the second,
to reduce the costs for participants.
Sponsors have much to show for both
struggles. In terms of the latter in particular,
recordkeeping fees have fallen by
half, and, from 2006 through 2016, investment
fees retreated 28%, according to the
annual Defined Contribution Plan and
Fee Survey for those years from consulting
firm NEPC. In 2017, however, fees stopped
falling and showed little change. Sponsors
are still hammering providers to take costs
lower, but experts differ on how much
more there is to cut.
" Plan sponsors have done much
to reduce investment fees, " notes Ross
Bremen, a partner at NEPC, in its Boston
office. " And fee litigation in all of the
recordkeeper lawsuits has only intensified
sponsors' desire to stay on top of the
situation. " (The chart shows the median
fee rates from the NEPC surveys and the
steady rate last year.)
Investment fees make up 80% or
more of total plan costs and fall under
frequent sponsor scrutiny in quarterly
reviews, Bremen says. In NEPC's 2016
survey, about one-third of plans reported
bargaining for a lower fee for one or
more investment products. Progress
in fees reflects the addition of passive
investment funds: About one-third of
target-date funds (TDFs) in plans NEPC
surveyed are passive. At larger plans,
sponsors are relying less on mutual
funds, in favor of lower-cost, commingled
investment trusts.
The other 20% or so of costs,
recordkeeping fees, are typically benchmarked
annually, through comparisons
56 PLANSPONSOR.com February-March 2018
Art by Katherine Streeter

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PLANSPONSOR - February/March 2018

Table of Contents for the Digital Edition of PLANSPONSOR - February/March 2018

25 Years of Retirement Plans
2017 DC Survey: Providers
2018 Best In Class 401(k) Plans
Trends in Risk Assets
What Lower Fees Reveal
Sandwiched Between
Nondiscrimination Testing
PLANSPONSOR - February/March 2018 - Cover1
PLANSPONSOR - February/March 2018 - Cover2
PLANSPONSOR - February/March 2018 - 1
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PLANSPONSOR - February/March 2018 - 25 Years of Retirement Plans
PLANSPONSOR - February/March 2018 - 17
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PLANSPONSOR - February/March 2018 - 29
PLANSPONSOR - February/March 2018 - 2017 DC Survey: Providers
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PLANSPONSOR - February/March 2018 - 33
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PLANSPONSOR - February/March 2018 - 45
PLANSPONSOR - February/March 2018 - 2018 Best In Class 401(k) Plans
PLANSPONSOR - February/March 2018 - 47
PLANSPONSOR - February/March 2018 - 48
PLANSPONSOR - February/March 2018 - 49
PLANSPONSOR - February/March 2018 - 50
PLANSPONSOR - February/March 2018 - 51
PLANSPONSOR - February/March 2018 - 52
PLANSPONSOR - February/March 2018 - 53
PLANSPONSOR - February/March 2018 - Trends in Risk Assets
PLANSPONSOR - February/March 2018 - 55
PLANSPONSOR - February/March 2018 - What Lower Fees Reveal
PLANSPONSOR - February/March 2018 - 57
PLANSPONSOR - February/March 2018 - Sandwiched Between
PLANSPONSOR - February/March 2018 - 59
PLANSPONSOR - February/March 2018 - Nondiscrimination Testing
PLANSPONSOR - February/March 2018 - 61
PLANSPONSOR - February/March 2018 - 62
PLANSPONSOR - February/March 2018 - 63
PLANSPONSOR - February/March 2018 - 64
PLANSPONSOR - February/March 2018 - Cover3
PLANSPONSOR - February/March 2018 - Cover4
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