Hey, it's Mike Sayre with CUI Wealth Management, your 401(k) advisor. Let's talk about benchmarking. You're involved in your company's 401(k) management, and you want to know if you're overpaying for the services you're getting for the 401(k) you're managing. How do you do that? You benchmark. Benchmarking is essential because it can give you an idea of your plan compared to others around you. Other similarly sized companies with similar asset amounts.
To see why this is important, let's say you're out for a drive and you need to fill up your gas tank. You look around, and as you pass by different gas stations, you can see the costs. It's straightforward to quantify and get an idea of what's fair. But, it's not like that for 401(k)s. You can't just drive down the street and say, oh, this company's paying this much, and that company's paying that much. You have to get a benchmark report to be able to see how you compare. Paying attention to fees is important because every dollar spent on expenses is a dollar that could have been invested in a participant's account earning interest. Many costs do come out or can come out of a participant's account balance. The last thing you want to do is have a participant that comes to you later and says, "you know, I could have been in a better position if it weren't for all these unnecessary fees that came out of my account."
It's essential to get benchmark reports. If you need one, you can talk to your advisor or your recordkeeper. You can speak to us; we're happy to help you obtain a benchmark report. It's essential to make sure that fees are justified, and if you are overpaying to go back to the service providers and request new quotes. Or get an RFP and see if there are some better options out there. Fees are necessary to look at, but they're not the full picture. If you need a car, you could probably get a clunker, something that might not even start. That might be the cheapest option, but it doesn't mean it's the most prudent or best option.
It would be best if you kept in mind that price isn't everything, but it is something. The most important thing is that your decisions are prudent because you're making those decisions on behalf of all the other participants. Once again, when you do that, make sure that's part of your fiduciary file and documented so that you can back up your decisions.— Michael Sayre with CUI Wealth Management, your 401k advisor.