If You are Not Taking Your Retirement Plan Out to Bid Right now, You Should.

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We have been taking our clients plans to live bid on a 36 month cycle for the last 12 years, it’s actually a part of our service plan.  The results of those bid proposals, in terms of potentially decreased expenses to participants and/or increased provider services, cannot be overstated.  But the last 18 months has presented 3 opportunities that plan sponsors should consider capitalizing on because once gone, we may not see again for a long time.

• High Account Values – A rising tide floats all boats and the extended bull market has certainly floated retirement plan balances, especially the rapid appreciation in the equity market experienced in 2017. Many recordkeepers look closely at total plan assets and average participant balances when pricing, the higher the better.
• Bottom of Fee Compression – Since the 408(b)(2) disclosure requirements were fully implemented in 2012 we have seen a steady decline in service provider fees. Today we are at or very close to the bottom of this trend.  We have begun to see a trend of adding additional services for fee or requiring use of certain investments as service providers seek to recoup lost revenue due to fee compression.
• Changing Investment Trends – The continued trend towards index based investment lineups has driven down costs for actively managed mutual funds too as active managers introduced retirement share classes with low or no revenue sharing. Active ETF and Collective Investment Trust investments (CITs) have begun to appear on more service provider platforms.  The opportunity to drive investment costs for participants lower has never been better.

Over the last 6 months we have seen plan sponsors have more successful outcomes in reducing plan expenses due to live bid RFP’s.   Additionally, live bid RFP’s can provide valuable information to plan sponsors when negotiating with their current service providers.

If you have never taken your plan out to a live bid RFP or if it’s been a while, NOW IS THE TIME!  The stars are aligned to create a potentially great opportunity for your retirement plan participants.  Remember, every dollar saved in expense is a dollar left in participant accounts with the potential to compound for their retirement.

Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member
FINRA/SIPC.

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