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401k Administration & 401k Recordkeeping Isn’t a “High-Margin” Business

We have been in the 401k administration and recordkeeping business for over 30 years. We provide small businesses with affordable, quality 401k plans, and charge a fair price for services rendered. What we do NOT do is deduct 401k fees from the employees’ personal 401k assets. In 30 years in business, we have never taken a penny of a worker’s 401k retirement savings because we think asset-based 401k fees are wrong. Plain and simple.

The truth about the 401k recordkeeping business is that it “should be” a relatively low-margin business, with a revenue stream similar to that of a payroll service provider. You would not expect a payroll service provider to take a percentage of a worker’s paycheck as part of its compensation for services rendered. So why do 401k service providers think it’s reasonable or fair for them to take a percentage of a worker’s retirement savings for their compensation?

Like any payroll service provider, we use a blend of technology and skilled labor to provide an affordable, quality 401k service. We do not resort to extracting 401k fees from employees’ 401k accounts. We do not understand why venture capital firms have invested so heavily and aggressively in 401k provider start-ups unless they are counting on earning significant profits 401k fees in the future.