I really enjoy the song "Chances" by Five For Fighting. Here's a link to a You-Tube music video. Here's a link to the song lyrics. It's also famous as it is part of the sound track of the movie "The Blind Side" at the end.
As I was working out this morning on the elliptical listening to some great tunes this song came up. A phrase near the beginning of the song, is Chances are We'll Find a New Equation. And it hit me like a rock.
This is exactly what we bring to the small plan market!
This is at the heart of the revolution we are leading to save the small to medium size 401(k) plan market, plan-by-plan. Fortunately for people in plans we oversee, "Chances are We'll Find a New Equation".
We actually modify two equations rather than "find" two new equations.
We modify the equations for the Record-keeping/Admin/Custodial services fee and for the advisor/broker fee. We change the Record-keeping/Admin/Custodial service fees equation. The equation for the mutual funds is not changed - we simply follow ERISA best practices that include always using lowest expense ratio funds.
I would be glad to show you how we modify the equations. Please reach out to me. Best way to learn about how we change the equations is to allow us to analyze your plan so we can discover what is your current equation! Is your plan cost based on the original, or the modified equations?
With the modified equation, current fees are low - and just as important - arguably MORE IMPORTANT - fees grow at a much reduced RATE OF GROWTH as the plan grows in total assets! Plans inevitably grow in size and so it is important to understand future costs when the total plan assets have increased.
For those of you math/finance affectionados - the equation modification has to do with the combination of fixed and variable fees. We modify the original equations with mostly high variable fees, with a mixture of fixed plus very low variable fees. The variable fees are asset-based fees that grow with the total plan asset growth. The fixed fees are just that - fixed. They do not increase as the plan grows in total assets.
This is what the plan sponsors would be wise to understand - and this is why the companies that dominate this market, are becoming and remaining unreasonably profitable - the original equation that most plans still have and rely upon is making the insurance companies wealthy - and sadly - their unreasonable profits based on variable fees are at the expense of the employees' retirement account growth. The accounts grow more slowly, therefore resulting in significantly less total assets years later when they retire!
Call us or schedule a meeting with the button below, because: Chances are We'll Find a New Equation!