Every few years, someone declares revenue sharing “dead.” And every few years, it stubbornly survives. Revenue sharing is still legal. It’s still widely used. And yes, it’s still dangerous—especially for plan providers who don’t explain it well.
The risk isn’t revenue sharing itself. The risk is how casually it’s treated.
Providers often assume that if revenue sharing is disclosed, the job is done. It’s not. Disclosure doesn’t equal understanding, and understanding doesn’t equal prudence. Plaintiffs know this, which is why revenue sharing keeps showing up in complaints.
Here’s where providers get into trouble: they fail to help sponsors understand the tradeoffs. Revenue sharing can reduce explicit fees, but it can also distort investment selection, obscure true costs, and create cross-subsidies between participants. None of that is inherently illegal—but all of it needs to be considered.
A provider who presents revenue sharing as the easy option without discussing alternatives is doing their client—and themselves—no favors. Courts expect fiduciaries to evaluate fee structures. When providers gloss over that evaluation, they become part of the story.
The smarter approach is transparency with context. Explain what revenue sharing does, what it costs, who benefits, and what other options exist. Then document that conversation.
Revenue sharing isn’t a villain. But it’s not harmless either. Providers who treat it casually risk being seen as facilitators instead of advisors.
And in ERISA litigation, that’s a dangerous place to be.
