Financial Advisors

I have a 401(k) plan that I am being requested pricing on for a local medical group. It's about $2M with 57 participants. What would you guys take as far as compensation goes for a plan of this size?

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As you know all plan providers have different fee's as do the funds in the plan . Typically here is what I see in the 401k space . Plans under 1m in assets -1 percentPlans between 1m-2m - .05 percentPlans over 2M- 0.25-3percentWith that being said I just became broker of record on a 6m dollar plan and the RIA firm managing it was charging 0.65 percent . This was a very vanilla 401k with around 120 employees. Provider is John Hancock , they are also very expensive, I will be looking to change to a lower cost provider soon.

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What was the reason they wanted to change?

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Realistically, within 10 years, thee's going to be consolidation within the 401K space, and most plans will (or should be) around 25 bips (or less) to the advisor, and using index funds at <20 Bips.Add in various TPA fees, etc. and they should still be at or below 100 Bips. Maybe that will be higher for small plans because TPA fees are going to have floors, but for moderate size and larger, there's no reason to be over 100 Bips, all-in.

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I’m not sure what the numbers are FA1 is referring to (may have been a typo). @FA1 - you can ask Hancock to reprice the plan (and you should incorporate this as part of your practice if advising on 401k plans.) I have a large number of plans under advisement - $2m plan would be priced roughly 35bps. Depending on how much work would be required. If you’ll be fully engaged in the plan and adding value through plan design/presentations/1x1’s/etc, 35bps is realistic. If you’re not going to add value outside of meeting with the owner to review the investment options, 25bps is realistic. Point is - you need to be able to justify your fee whichever way you choose.

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2MM ... 40-50bps... I associate full service with more money and time spent on the plan. Would never take fiduciary responsibility for only 7k (35bps).

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We would charge 35 bps for full service

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FA2 and FA3 are right on ... 35 bps seems right.

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