Shoppers often must confront the hidden costs of convenience. Sometimes it means paying a little extra for that convenience. Sometimes it's accepting a little lesser quality for that convenience.
All 401(k) plan sponsors must act as fiduciaries for the sole benefit of their plan's participants. When they make a decision based on personal or corporate convenience, 401(k) plan sponsors need to ask themselves if it's worth it to sell their souls for one-stop shopping.
Many believe, and not without some merit, bundled service providers offer a convenience particularly compelling to the smaller 401(k) plan sponsor. These plans often are associated with companies too thin on personnel to assign one specifically to the 401(k) plan. As a result, the plan sponsor – usually the company owner or its president – simply decides to make the easy choice and selects an "all-in-one" service provider. This can be a broker, a mutual fund firm, an insurance company or even a payroll processor, for example.
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