New White Paper! Fee Compression: Five Ways Providers Monetize Recordkeeping

Each year, our firm completes our review of retirement plan costs, benchmarking them against our peer ranges. In 2018, we continued to see prices decline and participants benefiting from the compression. For clients, we now routinely see their fees at $100 per participant or less for more attractive engagements. That means for recordkeeping, custody, call center, web trading, employee education, and frequently legal and technical support, large financial service organizations are getting $100 a year for each account holder they serve.

While some of the compression can be attributed to vendor consolidation and scale, why would billion-dollar financial services organizations continue to invest in recordkeeping capabilities where profits have traditionally been so thin? The answer is: they believe there is an opportunity to generate additional revenue beyond the recordkeeping fees for servicing retirement plans. Generally, we believe there are five areas where recordkeeping vendors have tried to monetize their relationship with retirement plans:

  • Proprietary investment management
  • Managed accounts
  • IRA rollovers
  • Cross-selling retail financial products
  • Annuitization

All five of the solutions carry the possibility for the recordkeeper to earn additional higher-margin revenue not part of a standard recordkeeping engagement.

In this paper, authored by our managing principal Erik Daley, we take a closer look at each of these five approaches.

Download our White Paper


Over the course of the last year, Erik wrote a series of blogs on this topic. Click the links below to read the posts.

Why Do Fees Continue to Compress?
Are Your Plan Investments Independent of Your Provider?

Understanding the Managed Accounts Marketplace

IRA Rollover - The Engine of the Retail Financial Service Marketplace

It's All About the Leads...

Annuitization... The Final Frontier



Multnomah Group is a registered investment adviser, registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.   Investments involve risk and, unless otherwise stated, are not guaranteed.  Multnomah Group does not provide legal or tax advice.  Any views expressed herein are those of the author(s) and not necessarily those of Multnomah Group or Multnomah Group’s clients.

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