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July 13, 2011 at 12:51 PM
Lincoln Trust Co., a Denver-based third-party administrator, introduced the Personalized Expense Ratio (PER) Wednesday, which allows participants, plan sponsors, and advisors to see the actual cost of their plans without having to perform calculations themselves.
The new Lincoln Trust offering is designed to go beyond the Department of Labor’s (DOL’s) recent revisions to 408(b)(2) and 404(a)(5) reporting requirements, according to the company. As Lincoln Trust notes, neither regulation calls for the calculation and display of a plan’s or a participant’s total plan cost.
“We didn’t think that the DOL regulations went far enough to provide a clear understanding of the true cost of a 401(k) plan,” Tom Gonnella, senior vice president of corporate development for Lincoln Trust Co., said in a statement. “Our ‘Personalized Expense Ratio’ was designed to provide a more precise calculation by including investment expenses and aggregating fees from multiple service providers.”
Lincoln Trust claims to be one of the first platforms to combine actual fees paid with investment expenses in a single calculation, both for the individual participant and for the entire plan. Fee categories include recordkeeping, advisor, TPA and investment expense fees, as well as revenue sharing offsets. PER also calculates and displays investment costs using a participant’s average daily balance rather than just period-end balance.
