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Despite the differences, the study found the two primary drivers from the prior survey continued to be important factors in explaining the variation in fees across plans within the 2011 survey sample. Specifically, the study showed that plan size as measured by number of participants and average account balance were primary drivers of a plan’s ‘all-in’ fee, which was also the case in the 2009 Fee Study. In addition to the two plan-size-related primary drivers, the 2011 Fee Study found that the percentage of a plan’s assets in equity investment options was also determined to be a primary driver of a plan’s ‘all-in’ fee. This factor was identified as a secondary driver in the 2009 Fee Study. The 2011 study found investment fees make up a significant portion of total plan expenses—84% of the ‘all-in’ fee for the study sample. Findings also showed that equity investment options have higher expense ratios than fixed-income or other asset classes. A regression analysis indicated that a 10 percentage point shift in plan assets into equity investment options is associated with an added 2.6 basis points to the ‘all-in’ fee. The Fee Study report is here.
Despite the differences, the study found the two primary drivers from the prior survey continued to be important factors in explaining the variation in fees across plans within the 2011 survey sample. Specifically, the study showed that plan size as measured by number of participants and average account balance were primary drivers of a plan’s ‘all-in’ fee, which was also the case in the 2009 Fee Study.
In addition to the two plan-size-related primary drivers, the 2011 Fee Study found that the percentage of a plan’s assets in equity investment options was also determined to be a primary driver of a plan’s ‘all-in’ fee. This factor was identified as a secondary driver in the 2009 Fee Study.
The 2011 study found investment fees make up a significant portion of total plan expenses—84% of the ‘all-in’ fee for the study sample. Findings also showed that equity investment options have higher expense ratios than fixed-income or other asset classes. A regression analysis indicated that a 10 percentage point shift in plan assets into equity investment options is associated with an added 2.6 basis points to the ‘all-in’ fee.
Rebecca Mooreeditors@plansponsor.com