“We didn’t think that the DOL regulations went far enough to provide a clear understanding of the true cost of a 401(k) plan,” said Tom Gonnella, senior vice president of corporate development at Lincoln Trust. “Our Personalized Expense Ratio was designed to provide a more precise calculation by including investment expenses and aggregating fees from multiple service providers.”
The fee categories included include recordkeeping, adviser, third-party administrator and investment expenses, as well as revenue-sharing offsets. The calculator can be used daily, based on the participant’s average daily balance, rather than just period-end balance.
The DOL does not require the disclosure of investment costs and only is asking for the disclosure of the other expense ratios for the first $1,000 invested in a fund.
“We don’t believe that participants, plan sponsors or advisers should have to wonder what they’re paying for their 401(k) plans,” Gonella said. “And we don’t think each party should be burdened with having to perform this calculation themselves. With PER, Lincoln Trust provides all the information in a simple to understand figure along with a relevant benchmark.”
Money Management Executive