For our last webinar in June, we addressed the topic "monitoring client and investment fees." Both during the webinar and in follow-up, we received a lot of questions asking for further clarification. In this post, you'll find answers to the majority of questions submitted during the session written by the panelists from the original webinar.
A recording of the webinar can be viewed on the webinars page of our website. If you still have any questions, let us know in the comments below.
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Now on to those questions:
Q: For the mutual fund companies, the management fee is normally included in the expense ratio, correct?
A: Yes, the management fee is included in the expense ratio. We typically use the Prospectus Net Expense Ratio in our analysis and it includes the management fee, 12b-1 fee, administrative fee, and all other asset-based costs incurred by the fund.Q: Where do you get the information for the sub t/a fees? We have found that different custodians negotiate different sub t/a fees from fund families.
A: The sub t/a fees used in the presentation were examples. You are correct in stating that the sub t/a fees can change from custodian to custodian and from plan to plan.Q: For an individual with a 403b annuity plan, it sounds like all annuity fees are included in the published "expense ratio," correct?
A: When evaluating an annuity expense ratio we look at the expense ratio for the underlying investment and the M&E risk charge for the annuity component. There are other fees and expenses that are not part of this "expense ratio" that should be considered such as contract charges, annuity administration fees and surrender fees. These components are not part of the expense ratio.Q: What resources do you recommend (books, websites, etc.) to determine what are reasonable plan fee's, industry avg's etc.
A: Fiduciary Benchmarks, Brightscope, icifactbook.com, and 401k Averages BookQ: Please clarify how the ERISA bucket works, why created, etc.
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