Alright, listen—I’m stubborn. I admit it. There are just some things I don’t understand, and when I don’t understand something, it sticks with me. It burrows into my brain like a woodpecker with an agenda.
So I get this call. Financial advisor. Nice guy, polite. He asks about how I price my retirement plan document work—specifically my flat fee. I tell him, “Two thousand bucks. That’s it. That’s the price.” Straightforward, right?
Then he hits me with this: “Does the fee change if the plan has, like, thousands of participants?”
What? Thousands? No! What does that have to do with anything? I mean, sure, I get the curiosity, but c’mon. Drafting a plan for one guy in a cardigan or drafting one for an entire Fortune 500 army—it’s the same document. Same rules, same IRS pre-approved volume submitter plan. I don’t suddenly type faster because there are more participants. I’m not being paid by the comma.
So I explain this to him. I tell him: “Look, the number of participants—that’s a TPA issue. They’ve got the sub-accounts, the statements, the whole buffet of administrative nightmares. That’s where the scaling happens. Not with me.”
I mean, what does he think I’m doing? Personalizing each plan with tiny names etched in the margins? “Oh, Janet from Accounts Payable is in this one. Better raise the fee!”
And by the way—I’m no TPA expert, but I’ve been around. I know enough to know that the only fee that should scale with assets is the custody fee. That makes sense! Six to eight basis points, fine, because you’re holding more stuff. You’re the vault. You want a bigger vault? You pay a little more. That I can get behind.
But here’s where it gets nuts.
Some of these well-known, highly regarded TPA firms—they’re still charging administration fees based on plan assets. Assets! Like they’re investment advisors! What are we doing? That’s like me saying, “Oh, your plan has 3,000 participants? That’ll be $200,000. Because… reasons.”
It makes no sense! The amount of money in the plan doesn’t make it more difficult to administer. It’s not like the server is sweating under the weight of extra zeros. You’ve got 100 participants whether it’s a $10 million plan or a $100 million plan. Same statements, same calculations, same work. The decimal place just moved over.
Look, I know what people are gonna say. “If the client’s okay with it and it’s disclosed, it’s fine.” Sure. But you know what else is disclosed? Airline baggage fees. And we still complain about those, don’t we?
Call me old-fashioned. Call me stubborn. But I believe in this crazy little thing called logic. A fee should relate to the work involved. Not some arbitrary number you pulled out of a pie chart.
Anyway, that’s my rant. I feel better now. Sort of.
