Plan sponsors have more ability to renegotiate their recordkeeping deal than they may think.
Over the past year, advisory firm Pension Consultants Inc. helped 20 of its sponsor clients reduce their plan recordkeeping fees by an overall amount exceeding $500,000. “We review our clients’ contracts with recordkeepers annually and ask the recordkeepers for data on the services they actually performed during the year,” says Todd Hughes, the firm’s director, ERISA [Employee Retirement Income Security Act] and vendor services, in Springfield, Missouri. Pension Consultants also does fee benchmarking for each plan, he says. “Then it’s a matter of going to the recordkeeper and telling it, ‘Here is what we’re seeing,’” he says.
When sponsors have hard data showing that their plan pays higher fees or gets fewer services than the current market norm, recordkeepers generally will do what it takes to keep the client, Hughes says. “[For recordkeepers,] there is a price to get a plan, and there is a price to keep a plan. And there’s a gap between the two.”Story Continued