The just-released 25th Edition of the 401k Averages Book confirms what many of us on the fiduciary side have known—and preached—for years: fees continue to fall, but not evenly. While this is welcome news, it’s also a wake-up call for those who still haven’t benchmarked their plans in the last few years.
Investment-related fees dropped between 0.02% and 0.12%, depending on plan size. Recordkeeping fees inched downward, in some cases by 0.03%, driven by fierce pricing competition and heightened fee transparency demands from sponsors, participants, and yes—plaintiff’s lawyers.
Advisor fees? Largely flat or slightly down, averaging a 0.01% decrease. That’s consistent with what I’ve seen in my own practice: fee compression is real, and fiduciaries who don’t regularly test their plan pricing against the market are either asleep at the wheel or setting themselves up for trouble.
And here’s the punchline: smaller plans still get the short end of the stick. A $5 million plan is paying 1.08% in total costs, while a $50 million plan pays 0.76%. Advisor comp alone drops from 0.37% to 0.16% as plan size scales. If you’re a small employer reading this, don’t assume your costs are “reasonable” just because no one’s complained—benchmark, document, repeat.
The 25th Edition includes 24 plan scenarios, helping plan sponsors see how their plan stacks up. One stat jumped off the page: a $1 million plan with 100 participants can cost anywhere from 0.87% to a staggering 3.56%, depending on the provider and fee structure. That’s a lawsuit waiting to happen.
As always, kudos to Joseph Valletta, CFA, and the team at Pension Data Source for providing this indispensable benchmarking resource. For fiduciaries, ignorance is not bliss—it’s liability.
