In the News
AUG 25, 2016
“Schwab does have some recordkeeping presence out there, but nothing like Fidelity,” says Brooks Herman, head of research at BrightScope. Large recordkeepers such as Fidelity and TIAA have lowered fund fees enough to retain assets that might otherwise go to Vanguard, he notes.
AUG 22, 2016
A small 401(k) plan with $10 million or less in assets had an average annual fee of 1.17 percent in 2013 compared to an average fee of 0.58 percent for all 401(k) plans, according to a study by BrightScope, a website that rates 401(k) plans, and the Investment Company Institute, which represents the mutual fund industry.
AUG 19, 2016
Friday's suit is the latest in a lengthening string of complaints about high fees and poor investment choices at 401(k) and 403(b) retirement plans around the country. Franklin Templeton's 401(k) plan was hit with a similar suit last month, for example. Participants filed suits against the Massachusetts Institute of Technology, New York University and Yale University earlier this month.
Each of those defendants, along with Morgan Stanley, has a plan with high ratings relative to peers from Brightscope, which analyzes retirement plans.
AUG 19, 2016
A recent wave of lawsuits against a dozen 403(b) retirement plans offered by big-name universities is likely to hasten a trend among these plans to streamline their record keeping and investment options.
AUG 19, 2016
A dozen big-name universities in the past two weeks have been hit with lawsuits alleging the retirement plans for their employees, some of which offer hundreds of investment choices, are too confusing and costly.
AUG 16, 2016
It's not surprising, then, that these plans look to be better than most. An independent rater of 401(k) plans, BrightScope, judges seven of the eight targeted plans as being superior to their peer-group average, with only Duke falling slightly below the norm. On the critical issue of costs, the plans fare better yet. Six earn BrightScope's top cost score of "Lowest Fees," with the other two having "Low Fees." Thus, all eight plans are cheaper than the average for their peer groups.
AUG 10, 2016
“Given that there has been more and more 401(k) litigation, I’m not surprised to see it moving downstream to 403(b) plans,” said Brooks Herman, head of data and research at BrightScope Inc., which tracks retirement plans.
The 403(b) market had $900 billion in assets at the end of 2015, according to BrightScope. Users of 403(b) plans include public and private educational institutions, some nonprofit groups and some hospitals, among others.
By contrast, BrightScope put the 401(k) market’s asset value at $4.7 trillion as of the second quarter of 2015.
Typically, 403(b) plan charge higher fees than 401(k) plans—on average, they charge 0.53% of assets, versus 0.47%, according to BrightScope. In addition, 403(b) plans have historically offered dozens, if not hundreds, of investment options, including annuities. In contrast, 401(k) plans typically offer one to two dozen mutual funds.
AUG 5, 2016
Neuberger Berman spokesman Alexander Samuelson says the company looks “forward to fighting the allegations on the merits.” He pointed out that independent 401(k) ratings firm BrightScope Inc. gives Neuberger’s 401(k) plan high marks – a score of 90 out of 100, placing it in the top 15% of plans in its peer group.
“The implied argument in the complaint that active and passive fees should be identical is nonsensical,” he said.
AUG 3, 2016
Planner Allan Roth, founder of Wealth Logic, also prefers total market funds, but he notes the choice may not be yours. Research firm BrightScope says 8,750 401(k)s offer Vanguard 500, vs. 2,100 teeing up Vanguard Total Stock Market Index.
JUL 31, 2016
The robo trend is “a very pro-consumer development,” said Mike Alfred, chief executive of BrightScope. The entry of low-cost providers, he added, is helping to drive down 401(k) fees paid by employees of small businesses, which fell from an average of 1.21% in 2009 to 1.06% in 2013 among plans with $1 million to $10 million in assets, according to BrightScope and the ICI.
The technology entrepreneurs who lead the robos may also underestimate how difficult it can be to sell a 401(k) plan to a small company, said Brightscope’s Mr. Alfred. That’s one reason why insurers with sales forces have long dominated the small 401(k) market, he added.
JUL 27, 2016
Beginning Aug. 1, Empower will be the recordkeeper for several revamped defined contribution plans sponsored by Baylor Scott & White Health. According to the most current Department of Labor Form 5500 data aggregated by BrightScope, Aon Hewitt was the recordkeeper of the $1.2 billion Baylor Health Care System 401(k) in 2014, and Vanguard was the recordkeeper of the $851 million Scott & White Healthcare 401(k) at that time.
JUL 21, 2016
Over the past year, through June, the number of 401(k) plans Merrill supports grew from 34,411 to 36,164, with assets increasing from about $176 billion to nearly $209 billion and its participant base growing by about 450,000 people.
Those figures include a conversion of B of A’s own plan, however. That plan had nearly 240,000 participants and represented about $20 billion in plan assets as of the end of 2014, according to Department of Labor data aggregated by BrightScope.
JUL 20, 2016
Nylim’s plans collectively held more than $2.4 billion in assets at the end of 2014, representing savings of between roughly 20,000 and 25,000 participants, according to Department of Labor data collected by BrightScope. Participants had invested more than $300 million in the MainStay S&P 500 Index Fund as of December 2014, or about 15% of the fund’s $2 billion in assets at the time, according to the complaint and Morningstar data.
JUL 19, 2016
For comparison, plans with between $10 million and $50 million in assets pay an average 70 bps and 90 bps for domestic and international equity mutual funds, respectively, on an asset-weighted basis, according to a joint study by the Investment Company Institute and BrightScope Inc.
JUL 17, 2016
The threat of litigation may be driving down costs. According to BrightScope, a website that rates 401(k) plans, the average plan participant paid a total cost of 0.89 percent of assets in 2013, down from 1.02 percent in 2009 on a plan-weighted basis.
JUL 14, 2016
The largest 401(k) plans tend to have the lowest fund (and overall) fees, due to their economies of scale. For example, participants in plans with more than $1 billion in assets pay an asset-weighted average of 44 basis points for domestic equity mutual funds, compared with 81 basis points for plans with between $1 million and $10 million, according to a recent study conducted by ICI and BrightScope Inc.
JUL 8, 2016
The Sequoia Fund lagged its benchmark, the S&P 500, substantially in 2015, stemming from its concentration in Valeant Pharmaceuticals stock. The price of Valeant stock plummeted by more than 40% during the fourth quarter of 2015 after questions about the company’s accounting and product pricing surfaced. Prior to the price drop, the fund held about $9.3 billion in assets, according to data from BrightScope.
During the one-year period ending on April 30, 2016, the Sequoia Fund returned negative 27.46%, according to BrightScope data. Over the same time frame, the fund has had net outflows of about $1.4 billion.
The fund was the Disney plan’s third-largest investment option, representing 8% of plan assets, as of Dec. 31, 2014, according to BrightScope. By comparison, the largest holding, Walt Disney Company stock, represented 26% of plan assets, and the second-largest holding, BlackRock LifePath funds, represented 15%.
The 401(k) plan had more than 46,000 participants with account balances at the end of 2014, with an average account size of $120,000, according to BrightScope.
JUL 7, 2016
As Doyle points out, employees also have the option to invest elsewhere through something called a self-directed brokerage window. Yet, according to Brightscope, just 6% of assets in the American Century plan have found their way to the outside world.
JUL 6, 2016
Total costs in 401(k) plans have been falling since 2009, according to BrightScope, a provider of retirement plan data. In 2013, the average total plan cost was 0.89 percent of assets, compared to 1.02 percent of assets in 2009.
Participants who suspect their fees are higher than the norm should talk to their employer – known as the plan sponsor – about these costs, said Brooks Herman, head of data and research at BrightScope. The sponsor has a fiduciary responsibility to the retirement plan and its participants.
BrightScope rates retirement plans based on fees, company generosity and other metrics.
JUL 5, 2016
American Century’s 401(k) has received a score of 88 out of 100 from BrightScope, putting it in the top 15% of all plans in its peer group. As of the end of 2014, the plan had reached $607 million and had more than 2,000 participants, according to the 401(k) tracker and researcher.