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401(k) Plans Prefer Funds with Rev Share: Researchers

January 7, 2021

rev sharing

Revenue sharing collected by retirement plan recordkeepers results in higher overall expenses for participants and influences plan menu design, according to a new paper by SSRN. The report covers data from plan-level disclosures filed between 2009 to 2013 by the 1,000 largest 401(k) plans. The researchers looked at revenue sharing paid from the expense ratios on third-party mutual funds.

Foreside’s Sonja Formato, Senior Director, spoke with Ignites’ reporter Carmen Germaine sharing that Investors have become more aware of investment expenses and that plan sponsors are shedding away from higher-fee products amid a wave of excessive-fee lawsuits.

That’s been really the driver for a lot of people going to zero rev share, because they feel like, ‘If I go to zero rev share I’m going to be better off, because I’m not going to brought to court for having these 40-basis-point fees.

To learn more about how investors, retirement plans, third-party funds, and recordkeepers use revenue sharing, click here.