Commercial Insights

Beyond the benchmark: Understanding retirement plan fees

Learn more about a practical approach to upholding fiduciary responsibilities as a plan sponsor.

Key takeaways

• Benchmarking retirement plan fees is important, but value and outcomes matter just as much.
• Understanding recordkeeping, investment and advisory fees helps improve transparency and decision-making.
• A consistent, well-documented fee review process can help meet fiduciary responsibilities.

For businesses that sponsor retirement plans, understanding retirement plan fees is about more than controlling costs. It is a core part of fiduciary responsibility and directly impacts the value employees receive. As plans grow more complex, clear fee structures, regular benchmarking and transparent communication become essential.

We spoke with Chris Gleadle, Institutional Relationship Consultant, about how plan sponsors can evaluate fees, uncover hidden costs and simplify complexity.

How can plan sponsors determine if retirement plan fees are reasonable?

Gleadle: “Benchmarking is a great starting point. We use a combination of third-party benchmarking resources together with internal analysis to help give plan sponsors a clear view of where their plan stands in the market.

This helps them better understand the fee structure across the three main cost components: investment expenses, recordkeeping fees and advisory costs.

Benchmarking is just one part of the process. It provides helpful context, but it’s not the full story when evaluating a retirement plan. We help guide our plan sponsors to look beyond the numbers and focus on what they’re actually receiving for the fees they’re paying. Two plans may fall within a similar fee range but deliver very different experiences and outcomes.

Sponsors should consider whether the total cost lines up with the value being delivered, while meeting their fiduciary responsibility to act in the best interest of participants. Value comes down to things like service level, fiduciary support, the investment lineup and how well the plan is actually helping participants. Lower fees don’t always mean better value especially if service or results fall short. In some circumstances, a higher fee may be reasonable if the plan sponsor determines—after reviewing services, support, and participant needs—that the additional cost is justified and documented.

I had a client tell me that they were willing to pay more for better service and support. Hearing that firsthand really reinforced the importance of quality service to me. It’s a good reminder that it’s not just about price; it’s about what people are actually getting in return.”

What questions should you ask about retirement plan fees?

Gleadle: “One of the biggest gaps I see is that plan sponsors don’t always ask, ‘What am I actually getting for the fees I’m paying, and how are those fees really being structured?’

To understand that, you must break fees into three main areas—recordkeeping, investments and advisory—and then ask a few simple questions about each. For example: what’s included, what costs extra, how providers are paid and whether there are any indirect fees such as revenue sharing or offsets.

That’s where confusion usually comes in. Some of those costs, especially revenue sharing, are built into the investments, so they’re not always easy to see unless you take the time to break them out.

So, it really comes down to transparency. A big part of what we do is walk through each piece with plan sponsors, so they understand where their dollars are going and how everything fits together. When you take the time to do that, there are fewer surprises and more confidence.”

How often should retirement plan fees be reviewed?

Gleadle: “Fees should really be reviewed at least annually as part of a consistent fiduciary process. That helps make sure everything stays in line and nothing gets overlooked.

Beyond that, there are certain times when it makes sense to take a closer look. Asset growth is a big one because as plans grow, there’s usually more opportunity to revisit pricing. The same goes for changes in services, plan complexity, or if there are concerns around support or overall value.

From our perspective, it’s about staying proactive. As plans grow or change, we want to make sure pricing continues to reflect both the cost and the level of service being delivered.

A big part of our role is helping plan sponsors stay ahead of those moments, making sure reviews happen at the appropriate times and that fees continue to align with the size of the plan and the value being provided.”

What should a fiduciary fee review process include?

Gleadle: “A strong fiduciary fee review process doesn’t need to be complicated, but it does need to be consistent and well documented.

In practice, that means regularly reviewing fees using benchmarking and required disclosures, and documenting what was reviewed, who was involved, and how decisions were made—usually through committee minutes or a written summary.

At a minimum, the process should show that fees were evaluated, determined to be reasonable, and that decisions were made in the best interest of participants. It’s also important to capture the reasoning behind those decisions, whether that leads to staying the same or making a change.

At the end of the day, it’s about having a clear record that shows a consistent process and demonstrates that fiduciary responsibilities are being met over time.”

Connect with a Regions institutional strategist to:

1. Learn more about getting the insight you need for your retirement plan.
2. Explore our fiduciary service offerings.

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