Total plan costs for retirement plans have fallen in the last year, according to the 13th edition of the 401k Averages Book. Small plan costs fell slightly from 1.47% to 1.46%, while large plan costs fell from 1.08% to 1.03%. The range of expenses for small plans was between 0.38% and 1.97%. Large plan expenses ranged from 0.28% to 1.41%.
For small plan data in the 13th edition, the authors looked at plans with 50 participants and $2.5 million in assets. Large plans had 1,000 participants and $50 million in assets. In the 12th edition, small plan data was based on plans with 100 participants.
The drop in costs is due to a more experienced industry, Joseph Valetta, co-author of the book, told AdvisorOne on Wednesday.
“In the last couple of years, there’s been a greater focus on fees from a maturing industry,” Valetta said. “There are more experienced advisors who specialize in these plans, who have created awareness surrounding fees.”
Asset-based fees, including investment management fees, fund expense ratios, 12b-1 fees, wrap and advisor fees also fell. In small plans, average investment expenses fell from 1.38% to 1.37%. The average expense dropped from 1.05% to 1% for large plans.