Fee Benchmarking

Fee Benchmarking

The Employee Retirement Income Security Act of 1974 (“ERISA”) requires retirement plan fiduciaries to ensure that all fees paid out of the retirement plan are reasonable in light of the services being rendered. Plan sponsors are not required to purchase services from the lowest bidder, but they must be able to demonstrate a deliberative process by which the reasonableness of applicable fees is regularly considered. The topic of fee reasonableness has become a critical Department of Labor focal point since the late 2000s, making it extremely important for plan sponsors to be able to clearly articulate the process by which fiduciaries conclude that all plan fees are reasonable considering relevant facts and circumstances. The concept of fee reasonableness has grown so pervasive that most plan sponsors not covered under ERISA also seek to ensure fee reasonableness as a best practice. Multnomah Group provides plan specific fee benchmarking analysis to assist our clients in meeting the fee reasonableness standard. We use proprietary market pricing data to estimate the fee range specified in our analysis report. Multnomah Group’s goals in providing the annual fee benchmarking analysis to our clients are as follows:

  • Assist ERISA covered clients in meeting ERISA’s fee reasonableness standard
  • Assist ERISA exempt clients in maintaining a fee reasonableness best practice by providing meaningful comparison
  • Assist clients in understanding applicable plan services fees by discussing the current fee structure
  • Provide a discussion springboard for related topics such as the duty to prudently monitor the plan’s vendors
  • Recommend potential next steps (e.g. renegotiate service provider fees and/or service levels, launch formal request for proposal process) depending upon where current fees fall in or out of the benchmarked range