The simplest of scenarios is when a 401(k) plan holds an investment option that is invested in the “retail” share class, for which an “institutional” class of the same investment vehicle exists. Thereto, “retail” shares typically carry higher internal expense ratios that may include some form of advisor compensation – like front/back-end loads or 12b-1 fees. So, there may be an opportunity for the plan can gain expense efficiency; by retaining the exact same investment option, while utilizing a cheaper share class.
In addition, the vast majority of management companies and collective investment trust instruments have some form of shareholder servicing or sub-transfer agency fees associated with them – often referred to as “concessions”. These concessions are routinely provided to retirement plan service providers, in a practice commonly referred to as “revenue sharing”. So, independent of an investment option’s “share class”, there is often an ability to capture these concessions for the benefit of the plan.
As a result, Fi401k can provide side-by-side comparisons of the various share classes offered for each investment option as well as the available concessions associated with each; whereby almost any 401(k) plan can gain varying degrees of expense efficiency.
|Investment Option||Ticker||Exp Ratio||12b-1||Sub T.A.||Manager Name|
|AmFunds Washington Mutual R2||RWMBX||1.35%||0.74%||-||Alan N. Berro|
|AmFunds Washington Mutual R3||RWMCX||0.95%||0.50%||-||Alan N. Berro|
|AmFunds Washington Mutual R6||RWMGX||0.30%||-||-||Alan N. Berro|