Small business owners are still confused when it comes to the fees they are paying for their 401(k) plans.
A new national survey by ShareBuilder 401k found that because small business owners can’t figure out the fees they are unprepared for the questions their plan participants are asking.
“Our survey results suggest many small business owners are still in the dark when it comes to their 401(k) plans and costs, demonstrating our industry has more work to do in disclosing fees transparently and in ways that are easy to understand,” said Stuart Robertson, president of ShareBuilder 401k. “Everyone has a right to know the fees they’re paying for their 401(k) as over the course of a career, paying an extra percentage point can shrink your nest egg by hundreds of thousands of dollars.”
According to the survey, the majority of small business owners claimed to be aware of the new rules requiring 401(k) providers to distribute documents fully disclosing all plan fees, but only 60 percent recall receiving the new documents.
Of the small business owners who did recall receiving the new fee disclosure documents, the average time spent reviewing the documents was 16 minutes, and 83 percent walked away with questions about what their company should do next. Sixty-eight percent said they are not fully prepared to answer employee questions about their plans.
More than one-third of the survey’s respondents have hired, or plan to hire, a consultant to help them understand their options and nearly as many have gathered, or plan to gather, benchmarking data to help them compare alternate retirement plans for their company.
Even with the new fee transparency, only 33 percent of business owners have used the information to negotiate their plan with their current 401(k) provider and only 26 percent have used the information to shop for a new plan provider.
The survey, of 500 business owners and other decision makers with 100 or fewer employees, also found that most small business owners are not sure what is a fair 401(k) fee percentage.
The survey was conducted by Wakefield Research between Aug. 17 and Aug. 27.
Sharebuilder 401k provides easy-to-use, cost-efficient 401(k) retirement plans for small businesses ranging from the self-employed to those with 500 or more employees.