Soft Dollar Fee Recapture

Many plan fiduciaries do not have a full understanding of the revenues that their plan’s assets generate for the investment industry. Why is this important to understand? For many retirement Plan vendor contracts, there are revenue sharing agreements in place between the vendor and the investment managers. These revenue sharing arrangements are typical and in place to help off-set some of the expenses for the record keeping, administration and services of the Plan. Since these are mostly asset based, the higher the Plan assets the greater the revenue sharing amounts paid to the service providers. Therefore, as and if the assets grow over time through years of additional contributions and positive market lift, these excess revenue sharing amounts should be reviewed and negotiated downward to reduce the Plan’s total costs – both at the participant and the employer level. As we uncover and assist in negotiating these excess revenues, the savings over time could be substantial to the participant’s accounts – keeping more in their accounts at retirement..

We will review the practices of the plan’s investment managers and the service providers, and help the plan recapture – for its own plan purposes – transaction-based fees that may typically be retained.

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