New fee disclosure regulations could put pressure on popular asset managers that control trillions of dollars in 401(k) plans.
According to an analyst at Moody's, once plan sponsors know exactly what they're paying for, the reaction may shake up the defined contribution market.
These fees are used to compensate portfolio managers or investment advisors. They're also part of distribution and service costs (in the case of mutual funds, these are known as 12-b 1 fees). Additionally, they’re part of the investment option, and include custodial, recordkeeping and other operating expenses.
When a sponsor is comparing plans, they aren't given a single fee quote, but a range of options as providers compete for the sponsor’s business, according to the study.