What should a fiduciary know about a “bundled” plan?
“Bundled” plans resist economic scrutiny. Often times, these service providers become so intertwined that the provider can only estimate a provider is compensated from a 401k plan. A fiduciary must demand a more rigorous plan accounting. (return to top) (5) Describe a mutual fund expense ratio. The expense ratio includes the investment management fee and the 12b-1 fee. The investment management fee is more easily grasped than the 12b-1 fee. This latter fee was designed to provide mutual funds with cash for advertising purposes. Once a mutual fund is no longer reliant on advertising for its viability, the 12b-1 should be eliminated. However, academics point out that the 12b-1 fee has not gone away regardless of total assets. It now extracts revenue from investors for a variety of purposes having nothing to do with advertising, including paying for plan costs. The expense ratio excludes transaction costs. Transaction costs occur when a brokerage firm buys and sells securities for a mutua
