Benchmarking is often treated as a formality, something sponsors do to check a box. That mindset overlooks the real cost of not benchmarking—and it’s rarely obvious until it’s too late.
Fees don’t usually become unreasonable overnight. They drift. Services change, asset levels grow, and legacy pricing remains untouched because no one pauses to compare it against the market. Over time, that quiet drift can expose sponsors to significant fiduciary risk, even if participants aren’t complaining.
The same is true for services and investments. Without benchmarking, committees lose context. They don’t know whether performance is competitive, whether services are aligned with fees, or whether alternatives would better serve participants. Decisions made without context are difficult to defend, especially years later.
From a regulatory and litigation standpoint, benchmarking is less about results and more about process. Sponsors aren’t required to choose the cheapest option, but they are expected to know what reasonable looks like. Without benchmarking, that knowledge is missing.
There’s also a governance cost. Committees that don’t benchmark tend to rely on assumptions instead of evidence. That weakens decision-making and documentation, even when outcomes appear acceptable.
The real cost of not benchmarking isn’t just higher fees or missed opportunities. It’s the loss of a defensible process. In fiduciary terms, that’s often the most expensive mistake of all.
