NAPA Net - Polling Places 051322

How Are (Should?) Recordkeeping Fees Be Allocated?

Recordkeeping is a tough, low margin business. Once upon a time, per participant charges were a recordkeeping norm. Then revenue-sharing led many, perhaps most, to adopt asset-based fees that covered recordkeeping services. The latter has, of course, been repeatedly criticized in litigation.

There are, of course, rationales for both – asset-based fees mean that larger (and ostensibly higher-income) balances help subsidize newer participants, whereas (as pretty much every excessive fee litigation reminds us) there’s likely little difference in cost in administering a $100,000 participant account versus one that has just $100.

All that said, the issue of how to charge for recordkeeping services remains a point of legal “contention”, even though even the plaintiffs’ bar concedes that there is nothing “per se” illegal about the asset-based approach – and the courts don’t seem to have an issue with it, either.

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1. How do the plans you work with assess recordkeeping charges?

All asset-based.

Most asset-based.

About half asset-based, half per-participant

Most per-participant based

All per-participant based.

Other thoughts?

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2. Do you find that plan size matters in that determination?

Yes, larger plans more likely to use per-participant

Yes, larger plans more likely to use asset-based.

Plan size doesn't seem to make a difference.

Newer, smaller plans more likely to go with asset-based.

No, it's all driven by the recordkeeper.

It's all driven by plan sponsor preference.

It's mostly driven by advisor recommendation.

Other thoughts?

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3. Have you seen a shift in this fee structure over the past two years?

Yes, more interest in per-participant.

Yes, more interest in asset-based at my recommendation.

No real shift.

Yes, more interest in per-participant due to litigation concerns.

Yes, more interest in asset-based.

Yes, more interest in per-participant at my recommendation.

Other thoughts?

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4. Do YOU have a preference in recommendations?

Yes, I favor asset-based.

Yes, I favor per-participant

It really depends on the plan/plan needs & size

No - I see and recommend both.

Care to expand on that?

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5. Other comments about recordkeeping fees, how recordkeeping fees are assessed, the pros/cons of per-participant versus asset-based, the trends in per-participant versus asset-based, the impact that litigation - or concerns about litigation - have/might have on per-participant versus asset-based, the equity of per-participant versus asset-based recordkeeping charges, or life in general?

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6. What is your role working with retirement plans?

Advisor

Provider

TPA

Plan sponsor

Recordkeeper

Other (please specify)

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7. What size plans do you PRIMARILY work with?

Under $10 million in assets

$10-$20 million

$20-$50 million

$50-100 million

$100 million - $250 million

$250 million - $500 million

Above $500 million

Other (please specify)

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8. Suggestions for future survey questions?

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9. All responses are anonymous and confidential, of course - but if you'd like me to know who you are, or allow for a response, you can leave your email below...

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* 1. How do the plans you work with assess recordkeeping charges?

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* 2. Do you find that plan size matters in that determination?

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* 3. Have you seen a shift in this fee structure over the past two years?

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* 4. Do YOU have a preference in recommendations?

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* 6. What is your role working with retirement plans?

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* 7. What size plans do you PRIMARILY work with?

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* 8. Suggestions for future survey questions?

Question Title

* 9. All responses are anonymous and confidential, of course - but if you'd like me to know who you are, or allow for a response, you can leave your email below...

1. How do the plans you work with assess recordkeeping charges?

2. Do you find that plan size matters in that determination?

3. Have you seen a shift in this fee structure over the past two years?

4. Do YOU have a preference in recommendations?

6. What is your role working with retirement plans?

7. What size plans do you PRIMARILY work with?

8. Suggestions for future survey questions?

9. All responses are anonymous and confidential, of course - but if you'd like me to know who you are, or allow for a response, you can leave your email below...