PORTLAND, ORE. Executives for Fiduciary Benchmarks Inc. have set aggressive goals for the new firm and its defined contribution benchmarking service.
Id be really disappointed if we didnt provide benchmarks to 250,000 plans by the end of next year. If were successful with the 10 record keepers were actively targeting, I believe within a three-year period of time, it may be possible for us to own this space, said Ron Eisen, president of Investment Management Consultants, Portland, Ore., and a founding partner of Fiduciary Benchmarks.
Fiduciary Benchmarks service for sponsors takes into account everything from revenue-sharing fees and 12b-1 fees to per-participant-record keeping charges. It also provides value comparisons of plan complexity, outsourcing of administration and communication services and differences in business volumes and timing. The cost is $400 per plan report. The firm will use information from its own database to show how the DC plan compares to other plans.
Fiduciary Benchmarks initially is targeting record keepers as a way to get to sponsors, hoping most of their business will come from alliances, but will also work directly with sponsors.
Mr. Eisen founded the new company earlier this month with Tom Kmak, former president and chief executive officer of JPMorgan Retirement Plan Services, Kansas City, Mo., and Olena Berg Lacy, the former assistant secretary of labor. All have the title of founding partner.
The time is right for this company because the Pension Protection Act placed a spotlight on fiduciary responsibility surrounding plan fees.
When I was going out there before the PPA was passed, there was an interest in having an organization offer this type of service. But, after the PPA, it has been an even better experience, said Mr. Eisen.
Fees are one of the hottest topics in the defined contribution marketplace, said Mr. Kmak. Plan sponsors are concerned with fees, transparency, and reasonableness and benchmarking. I dont think the discussion of fees will get less important, he said.
A key to the service is not just benchmarking fees, but value as well, said Mr. Kmak.
Are DC costs important? Absolutely. But I also believe that of no less importance is the value provided by a retirement plan. This is especially true when you consider the fact that our industry is not even close to commodity status. Many people still dont know how much money they need for retirement, they are not saving enough, and they are not invested wisely. Considering costs without truly examining value is a huge mistake, said Mr. Kmak.
Mr. Eisen said he is looking to bring this service to market by first forming relationships with record keepers.
We have a list of the 50 largest record keepers in the U.S. and one out of three of them are actively engaged with us. We have six right now at the final stage of signing up, said Mr. Eisen, declining to name the record keepers.
The firm is also interested in co-branding the service with advisers.
We want to distribute through service providers first, but we will also sell directly to plan sponsors as well as advisers, he said.