Dark Horse Wealth (DHW), is a registered investment adviser (RIA), specializing in providing a hands on investment advice approach to retirement plan sponsors and business owners. DHW’s “value-add” extends beyond our personalized service approach. Our fee-only (non-commission) fiduciary based service is designed to be a independent voice that seeks to avoid “conflicts of interest”, lower costs and enhance plan performance.
Excessive fees and poor advice are the norm in the retirement plan industry, not the exception. As “co-fiduciary” we have the requisite skills and knowledge to uncover embedded fees, conflicts of interest, and investment service incapabilities inherent in retirement plan service provider industry. Unlike most plan professionals, we will act as co-fiduciary alongside the plan sponsor and are legally bound to put your participant’s interests first. We don’t engage is revenue sharing or work on a commission basis.
Unfortunately, the retirement plan industry is dominated by “consultants” and service providers who, in conjunction with investment fund companies, are benefitting from “revenue sharing” agreements that are not well understood by most plan sponsors. Most entities providing for retirement advice are able to leverage their relationship as a provider of other services such as insurance, payroll or banking services into selling you a retirement plan, so that it comes with high expense investment options that compensates them handsomely. Too often the results in reduced investment returns for retirement plan participants.
401(k) cost data illustrates our point. For example, the average investor in a 401(k) plan with $2.5 million in assets is paying an excessive 1.38% in investment fees. That is a insanely high AVERAGE! We live in a world where most investors, regardless of their size, should have access to funds with fees of 0.1 to 0.4%% for index investments and 0.6% to 0.9% for active management investments. What this means is that plan sponsors and employers are unnecessarily giving away thousands of dollars of their participants/employees money!
The Department of Labor (DOL) has become well are of the prevlance of “conflicts of interest” within 401(k) plans and is consequently implementing new regulations meant to shed light them. The result will likely be increased business regulatory risk as the DOL starts enforcing regulations in the coming years. It will be 401(k) sponsors feet that are held to the fire. Further, with implementation of the fee disclosure regulations by DOL, how long will it be until litigators dig into plan fees and successfully solicit retirement plan participants to team up them in lawsuits in order to recoup excessive fees?
Our guess is not long.