Revenue Sharing is costlier to plan participants

revenue sharing

I love when studies on retirement plans state the obvious.


According to researchers from Vanderbilt University; the University of Texas at Austin and the National Bureau of Economic Research (NBER); and the Board of Governors of the Federal Reserve System, revenue sharing paying mutual funds are more expensive than funds that don’t pay them.


The results indicate that revenue sharing translates into higher expense ratios in the retirement setting, while direct fees are not significantly different across revenue-sharing and non-sharing plans. Consequently, participants face higher all-in fees in revenue-sharing plans.


Higher fees are not offset by higher returns, according to the study.

You don’t need a brain surgeon to figure that it’s actively managed plans that pay revenue sharing and these funds have a higher expense ratio that can pay revenue sharing to the recordkeeper.

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