Fidelity Helps Small Firms Evaluate Plan Performance

October 9, 2006 ( - Fidelity Investments' has created a 401(k) plan benchmarking tool allowing small business owners to gauge how well their plans are faring.

According to a Fidelity press release, PlanExam allows employers to compare and contrast elements of their plans – including investments, costs, employee behavior and plan operations – against other plans in the industry. Edmund Murphy, executive vice president, Fidelity Institutional Retirement Services Company, said in the release, the evaluation can be performed in 30 minutes and at no cost.

Particularly, the PlanExam tool reviews asset allocations, deferral rates and participation rates so that employers can see how their employees are using their 401(k) plans and how education and financial planning tools influence those decisions. The tool also gives employers a way to see how their plan stacks up to others in terms of costs and effective management, sometimes revealing hidden charges and third party fees that can affect plan performance, the release said.

Fidelity said its research shows that 69% of small companies will review their plan at least once annually and 26% will look for a new 401(k) plan provider within the year.

In addition to its benchmarking tool, Fidelity offers the following suggestions to employers when reviewing their 401(k) plans or searching for a new provider:

  • Evaluate investment performance of funds in the plan, looking at how the funds have performed in the past and how they compare to similar funds in the market.
  • Determine whether theprovider offers a diverse set of funds to match the varied needs of employees, and ask whether automatic enrollment and automatic increase and/or default investments are available.
  • Research the reputation of various providers in the marketplace.
  • Ask questions about administrative fees, testing fees and asset fees and consider how those fees will impact the plan over the long term.
  • Ask how the provider will minimize the administrative burden of managing a plan in terms of recordkeeping, online retirement tools, etc.
  • Ask providers about the kind of guidance they would provide after the plan is in place for keeping the plan competitive and managing fiduciary risk.

For more information on PlanExam visit