How High-Cost, Low-Quality Funds Can Undermine Your Company’s Retirement Plan

As a business leader, offering a 401(k) plan is a powerful way to attract and retain talent. But not all plans are created equal—and the wrong investment lineup can quietly erode your employees’ retirement savings and expose your company to fiduciary risk.

The Hidden Cost of High-Fee, Low-Quality Funds

Every dollar in your company’s retirement plan should be working to build long-term value for your employees. But excessive fund fees and underperforming investments can greatly reduce retirement outcomes. Over time, these costs compound—potentially costing participants hundreds of thousands of dollars.

Some plan advisors recommend funds that pay them through revenue sharing arrangements. These opaque incentives can lead to fund selections that benefit the advisor more than your employees. That’s a conflict of interest that could put you and your company at risk as the fiduciary of your plan.

Short-Term Optics vs. Long-Term Performance

In bull markets, even mediocre funds can appear to perform well. But over a 10-, 20-, or 30-year horizon, the difference between high and low-quality investments becomes stark. Plans burdened with high-cost, low-performing funds can leave employees with significantly less at retirement—and that reflects poorly on your organization.

Why Fiduciary Oversight Matters

You don’t have to accept the status quo. Partnering with a 3(38) fiduciary advisor—especially a CEFEX-certified advisor¹ like Fisher\SMB^TM— can help you offload fund selection responsibility while ensuring decisions are made in your employees’ best interests. A 3(38) fiduciary assumes legal responsibility for investment selection, prioritizes low-cost, high-quality funds, and avoids revenue-sharing conflicts.

Take a Proactive Approach

If you haven’t reviewed your plan’s investment lineup and fee structure recently, now is the time. A better-managed plan isn’t just good for your employees—it’s good for your business.

Let’s Talk

Your employees trust you to provide a retirement plan that supports their future. Let’s make sure your plan works as hard as they do. Contact us to schedule a consultation and learn how we can help you optimize your 401(k) offering.