Low Cost, Flat Fee 401k Retirement Plans

Cheri Franklin CFP, AIF, CRPC | Clarity Capital Advisors |

In today’s job market, offering a low-cost, transparent retirement plan is essential, so here are three steps to get there.

First, the plan administrative costs should be transparent—preferably an overall flat fee or a per-participant flat fee. Fees calculated as a percentage of your plan’s assets for recordkeeping, TPA, custodian, and the plan’s advisor can impose an undue burden upon plan participants as the plan assets grow. Plans that are advertised as “free” to the plan sponsor (employer) are often littered with expensive mutual funds with hidden 12b-1 fees. Flat fee retirement plans can significantly reduce overall plan costs and provide total fee transparency.

Second, the plan sponsor should only utilize fiduciary advisors contractually committed to acting in the best interests of the plan participants. Since these fiduciary advisors will be counseling your employees regarding their retirement, they should possess credentials such as the Certified Financial Planner (CFP®) designation. Furthermore, the advisor selecting investments for your plan should have the Chartered Financial Analyst (CFA®) designation.

Third, use only low-cost and highly diversified investment options, consistent with the Prudent Investor Rule. Higher cost mutual funds, especially those with 12b-1 fees, are highly problematic and create potential liability for plan sponsors. We now have a body of court cases where juries deemed the use of high-cost funds to be a breach of fiduciary duty, especially where lower-cost share classes were available.

Does your plan meet these criteria? If not, the good news is that you can easily fix it. At Clarity Capital Advisors, we are credentialed, fiduciary advisors who specialize in flat fee retirement plans with low cost investments. Our plan partners are flat fee providers with decades of experience. For more information, including a quote for flat fee plan services, please call us at 800-345-4635 or email us at retirement@clarityca.com. Let us create the ideal retirement plan for you.