Data shed light on how much 401(k)s pay advisors

investmentnews.com:

The overall fees charged to 401(k) plans are well-documented – but information about how much goes to advisors isn’t widely available.

New data published this week in the 401k Averages Book shed some light on that. As with other types of fees, advisor compensation varies by plan size, with $5 million 401(k)s paying an average of 37 basis points ($18,500 total) and $50 million plans paying less than half that rate, at 17 bps ($85,000 total).

Those figures come from the 24^th edition of the book, which launched this week. Although the publisher, Pension Data Source, has had compensation information for 401(k) advisors available in its database, it had not previously included it in the 401k Averages Book.

“Advisor fees have been trending down in our database, but we never created that number for our averages book,” said Joe Valletta, the book’s author.

The decline in fees might apply more to larger 401(k)s, as advisor fees for small plans appear to have held steady over the past few years. Separate data from fi360 show that the median advisor compensation from a $5 million plan in 2018 was about 35 bps.

Meanwhile, $10 million plans paid advisors 28 bps on average that year, and $100 million plans paid 7 bps, according to earlier reporting of fi360 data by InvestmentNews. At the time, the average advisor compensation for small plans had been trending upward, while it had been decreasing by as much as 20 percent since 2013 for big plans.

Further, data last year from Employee Fiduciary showed median fees of 50 bps for advisors serving in a fiduciary capacity for plans with $1 million to $5 million in assets.

One reason compensation for 401(k) advisors has been tricky to evaluate is that it’s sometimes tied to the so-called