#11
Medium Risk
Not Reviewing Service Providers and Third Party Administrators
Fiduciaries must review service provider performance and fees to ensure reasonableness and best interests.
- Potential Consequences
- Excessive fees
- Poor service quality
- Fiduciary breach
- Participant harm
- Prevention Tips
- Conduct annual service provider reviews
- Benchmark fees against industry standards
- Evaluate service quality and responsiveness
- Document review process and decisions
- Consider RFP process periodically
Need Expert Guidance?
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As part of a plan sponsor’s obligation to have only reasonable plan expenses, they are required to review performance and fees of their service providers.
For the arrangement to be deemed reasonable, service providers must provide updates and reports regarding their fees and performance. Be sure to review annual updates from your service provider to be sure their performance and fees are in the best interests of your plan participants. As fiduciary, you are required to do so.
"It's not what you look at that matters, it's what you see."
— Henry David Thoreau
