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

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

The truth about the 401(k) 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 401(k) 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 401(k) service. We do not resort to extracting 401(k) fees from employees’ 401(k) accounts. We do not understand why venture capital firms have invested so heavily and aggressively in 401(k) provider start-ups unless they are counting on earning significant profits 401(k) fees in the future.