Products April 5, 2004

Invesmart Out with Plan Fee Comparison Tool

April 5, 2004 (PLANSPONSOR.com) - Plan sponsors and participants trying to stack up the money management fees they pay with the rest of the industry may want to consider a new product from Invesmart, Inc.
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Invesmart unveiled its Retirement Portfolio Cost Barometer and determined that 65 basis points or less represents a fair benchmark for the annual investment management fees.

To calculate the Retirement Portfolio Cost Barometer, Invesmart considered the investment management fees of 60 institutional mutual funds selected from a universe of 3,000 offerings representing 150 fund families. The investment management fees were calculated by netting from the fund expense ratio the revenue sharing for service and marketing available in the funds in the form of finder’s fees, 12b-1 fees, dealer concessions, shareholder servicing reimbursements and sub-transfer agent arrangements, Invesmart said in its announcement.

“According to our analysis, a well-diversified portfolio of the highest institutional quality mutual funds should not cost a plan participant more than 65 basis points annually,” said Rob Rossi, Director of Investment Research for Invesmart, in the announcement.   “If the investment management fees paid by plan participants are higher than 65 basis points, sponsors should ask their providers to explain what service value is being added.”

Rossi asserted that it may be more economical for plan sponsors to pay the service and marketing fees directly to the service provider rather than paying them through fees embedded in the mutual funds.

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