How Much Does Free Cost?

It is good business to control costs. So I am not surprised when employers are proud to say that they don’t have to pay anything for administration and record keeping on their retirement plan. Zero or nothing sounds like a really good deal. If an employer does not have to write a check for administration and/or record keeping it doesn’t mean they are getting a great deal.

The biggest difference between the employers that write a check and those that don’t is that the check writers know exactly how much they are paying for these services and the others do not. Experience has taught that if you don’t know how much the true cost is then you are likely paying too much. It is hard to think that some employers believe that the insurance companies, investment companies, banks, trust companies, and other providers of retirement plans doe the work for free. How much does free cost? If you don’t know you should. There is a cost to providing all of the following services for a retirement plan:

·        Administration

·        Record Keeping

·        Custody of assets

·        Education Materials

·        Investment Advice

·        Investment Management

Employers and their employees can be paying several thousand dollars more through hidden charges than they should. It pays to know how much free is costing you.

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