401 k providers question

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mivy's picture
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Joined: 2010-04-20

*****Mods please do not move this to 401k because no one will see it there***** Thanks in advance I have a potential client with a 401k plan at the Principal. The total assets are roughly 900k with the average participant account size being 37k. I've done some diggin around and all I keep hearing about is the Principals fees are so high, they're horrible, blah  blah blah. Does anyone know how to truly disclose the total fees on this type of account? I will meet with the owner in 2 weeks to discuss and leaning on just being the broker of record on the current plan but also trying to find a solution to lessen fees and finding a better plan if available. (Truly I just need help disclosing all the fees on this type of account) So does anyone recommend any other company? If so, what are the total fees associated with doing business? I know a Simple plan is an option so I have question on that type of plan as well. Is it as easy as setting a Simple Agreement and signing each indidivual client up with an account via the current platform that I use for brokerage? Then simply charge a fee for my services but basically manage each account as an individual versus collectively like a traditional insurance plan.

mivy's picture
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Joined: 2010-04-20

Somebody Anybody.... Screammmmmm  Felt like a rockstar for a moment... But seriously any help please...

Bear Bullion's picture
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Joined: 2010-11-18

Mivy,To get an actual idea on the fees being charged to the plan your first step should be to have the Plan Admin (sounds like your prospect) sign a broker authorization form. This form does not make you the broker of record just simply allows you to call Principal on behalf of the plan and inquire about costs, services etc.When you talk to Principal inquire about the Plan's Average Expense Ratio, if there are any Per Participant costs, Daily Asset Charge, any FA compensation, & Admin Costs. These together should give you a close figure to the Total Costs of the 401k and will allow you to compare it to other options. Hope this is helps get you started

BBQ's picture
BBQ
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Joined: 2008-07-24

#1, there is A LOT more to being their plan advisor than putting them in lower expense ratio funds. That said, you should ask for the last enrollment booklet...that should have the disclosures for the fund costs, as far as participants are concerned.

mivy's picture
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Joined: 2010-04-20

BBQ would you care to expand? I know its more to being their advisor than loweing expense fund ratios. Can you elaborate a little more please.... Thanks in advance

BigHitter27's picture
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Joined: 2010-12-22

Principal has ALOT of fees you need to ask about.  Get a wholesaler from a competing provider (John Hancock, ING, Prudential) to help you out with this.Common word here is Benchmarking Everything  401k wholesaler has tools on Benchmarking that can help you compare their plan.

BigHitter27's picture
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Joined: 2010-12-22

Principal has ALOT of fees you need to ask about.  Get a wholesaler from a competing provider (John Hancock, ING, Prudential) to help you out with this.Common word here is Benchmarking Every  401k wholesaler has tools on Benchmarking that can help you compare their plan.

BBQ's picture
BBQ
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Joined: 2008-07-24

mivy, you'll probably be a fiduciary to the plan, whether you acknowledge it or not. Go to http://www.dol.gov/ebsa/fiduciaryeducation.html and check out info on fiduciaries and retirement plans. I decided to specialize in company sponsored plans, and I'll tell you tht it's tough to do part time.The knowledge requirement is time consuming, plus the time it takes to go from a lead to having an employer sign a contract is long.I just conducted the semi-annual enrollment/investment education meetings, met 1:1 with some of the participants, monitor the recommended fund list and help the company's plan administrator with paperwork...which they oftentimes don't read! - In my limited expeerience, the problem is that everyone is expecting someone else to do the work of properly administering the plan. - I went out and earned a designation in retirement plans just as basic knowledge since I'm new and basically on my own and found out that I can't count on TPA's or providers for that much help.Good luck.

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