Bedford, New Hampshire-based Walker MacRae TranSend now offers access to a daily valuation recordkeeping platform, as well as a broad array of mutual funds, commingled funds or group annuity contracts with a “twist” – returning revenue sharing fees to the plan.
For several years now, it has been customary for recordkeepers to get a “scrape”, or share, of mutual fund revenues. Generally this is all or most of the shareholder servicing costs noted in the mutual fund prospectus, which typically pay for the costs of servicing shareholders, producing fund materials, marketing the funds, etc. While this fee varies, 25 basis points is typical (0.25% times the value of the assets).
The rationale is that the recordkeeper’s role as intermediary in dealing with individual 401(k) shareholders replaces, or at least diminishes, the need for the mutual fund complex to offer those services.
For recordkeepers, this revenue sharing has provided a means of subsidizing the cost of their operations, offering plan sponsors an apparently less expensive, and thus more competitive product.
The TranSend product purports to not only disclose, but to return these revenue sharing funds to the plan – either through a reimbursement for plan expenses, or as an additional income allocation to plan participants – at the plan sponsor’s discretion.
One note – according to the firm’s web site, while the Walker MacRae TranSend trading platform can trade electronically on a number of national platforms, trades between those platforms are completed no later than trade date plus 3 days (T+3). All trades within a platform are completed by T+1. The platforms included are:
- NSCC Fund/SERV
- SunGard Expeditor
- State Street IFTC
- Vanguard Discount
- Fidelity Maxxinvest Discount.