401K Providers "Equalizing" Fees

401K Providers "Equalizing" Fees

Posted in the 401K Forum

HBlank Quant

New York, NY

#1 Oct 8, 2012
401K Providers are inducing institutions (usually through Benefits/HR) to "equalize" fees to participants
This penalizes participants who chose low-fee options such as index funds and helps sponsor-"educatiors" steer them toward high-fee Target Date funds. "After all, diverting them toward our professional expertise is in the particpants' best interests", the pitch goes. Diversified Investments is one company I know for crtain that is pushing this.

Personally, I find it a total outrage. Does anyone know how common this practice is and how many sponsors are buying into this gambit by providers? What are your thoughts on fee "equalization?"

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