401k fees that are too high are like pornography: You’ll know it when you see it.

A larger company with its own robust Human Resources department would most certainly rely on its own resources for certain plan services. 

However, all smaller companies with plans need to access some of the same services, for which they don’t have their own in-house resources. Those companies, in order to reduce fiduciary and likewise liability exposure should most certainly hire the services of a third party provider. 

Most plan sponsors in the under $50 million plan size range need help determining the options that best fulfill the needs of their employees and the budgets of their companies. Most employers need to rely on an independent third party to help offload some of the fiduciary responsibilities of determining which investment options are the most appropriate for their particular plan and employee team.

Most employers want and need someone to present to employees verbally and in-person the features, benefits and options provided in the plan. These services not only increase participation in the plan, but they also improve employee morale and satisfaction. For the value received from these services, many employers are willing to factor into their budgets the necessary costs. For many businesses, 401k plans serve as an incentive to retain and attract employees.

In a way, 401k fees that are too high are like pornography: You’ll know it when you see it. Given that, what’s an “appropriate” fee for any particular 401k plan? There’s only one correct answer to this question: “It Depends.”

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