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For Immediate Release

Are Small Businesses Paying Too Much in 401(k) Fees?

ShareBuilder 401k Survey Finds 38% of Small Businesses Consider 3% or More in Fees Fair — Some Business Leaders Are Comparison Shopping

March 25, 2014:
SEATTLE, Wa. — Today's small business owners have a clearer understanding of 401(k) plan costs than they did two years ago, before the Department of Labor mandated plan providers disclose investment fees, according to a national survey by ShareBuilder 401k, which found 62% of plan sponsors think fee disclosures are easier to understand now than they were in 2012.

In fact, the majority (70%) of small business owners who review their fee disclosures feel prompted to comparison shop, and 29% said they plan to look for a new retirement plan provider.

However, despite the industry's progress in making 401(k) plans more transparent, accessible and low cost, small business owners who read their fee disclosure statements still consider 3% (on average) to be a reasonable price to pay. 3% is three times ShareBuilder 401k's 1% benchmark.

"While it's encouraging to see that plan sponsors find the new disclosures easier to understand—and feel compelled to take action—there remains a lack of awareness regarding what is a reasonable price to pay," said Stuart Robertson, president of ShareBuilder 401k. "3% is at least three times what plan participants should pay for an employer-sponsored retirement plan. It is essential to educate owners and employees on the low-fee options available to all investors."

The survey also found that 86% of small business owners are willing to spend more on their plan in return for increased support for the plan and for their employees. This includes access to investment advisors (37%) and employee guidance tools and materials (35%).

The survey also found that:

  • Small business owners want lower fees. 35% of small business owners said they negotiated or plan to negotiate better pricing with their current plan provider, while 34% gathered, or plan to gather, benchmarking data to compare their current plan with alternate plans. 65% of small business owners compared the fees in their plan to other comparable plans on the market.
  • Employees are taking a stand. 82% of businesses reported that at least some employees took action as a result of their 401(k) fee disclosure notice. The survey also revealed 41% of business owners received requests from their employees for a better understanding of their plan expenses.
  • Employers are taking action on their own. Fewer small business owners (23%) are likely to hire a consultant compared to last year (37%). Rather, companies are negotiating or planning to negotiate better pricing with their current 401(k) provider (35%) and gathering or planning to gather benchmarking data to compare with alternate plans (34%).

"We continue to advocate that no plan charge employees more than 1% in fees and investment expenses. The more knowledgeable owners and employees are about fees and their impact on savings, the closer they'll be to attaining financial freedom in retirement," Robertson continued. "Over the course of a 40-year career, the difference between 1% or 2% in fees can translate into to hundreds of thousands of dollars in lost retirement savings."

For employers that have their company fee disclosure document handy, they can use the online plan comparison tool at to benchmark their plan vs. a ShareBuilder 401k. For those that have a confusing fee disclosure document or simply don't have 10-15 minutes to spare, they may upload the fee disclosure document and a ShareBuilder 401k representative will complete the comparison report for you.

Since 2005, ShareBuilder 401k has made all of its pricing readily available on its website, and the company began advocating for an industry benchmark of less than 1% for "all-in" employee-paid fees in 2007. ShareBuilder 401k is not a fund provider and takes an unbiased approach in the evaluation and selection of funds with a focus on low-expense, index based investments from leading ETF providers such as Vanguard, iShares, SPDR and PowerShares to create a powerful line-up from which participants can choose, including five model portfolios. ShareBuilder 401k also serves as the investment manager role (ERISA 3(38) fiduciary) for employers, which helps maximize employer protections and saves employers the time of regularly reviewing investment options that are made available to employees.

Survey Methodology
The ShareBuilder 401k Disclosure Survey was conducted by Wakefield Research among 500 small business owners and decision makers offering 401(k) plans at companies with 100 employees or less, between November 19th and December 2nd, 2013, using an email invitation and an online survey. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 4.4 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample. If you would like to receive the research summary report, please contact Alison Cahill of Capital One at

About ShareBuilder 401k by Capital One
ShareBuilder 401k, a subsidiary of Capital One Financial Corporation, provides easy-to-use, cost-efficient 401(k) retirement plans for small and mid-size businesses serving clients that include the self-employed to those with more than 10,000 employees. ShareBuilder 401k is a leader in providing 100 percent index-based ETF investments (plus a money market) in 401(k) plans. ShareBuilder 401k offers a suite of on-demand services that make it simple for employers and employees to open and manage their retirement plans online at ShareBuilder 401k plans provide market-efficient investments and model portfolios that make it easy for employees to select sound investments to help them get on track to meet their retirement goals. Customers can also take advantage of ShareBuilder 401k consultants, customer success managers, and customer care agents to receive assistance in managing their retirement benefits.

You should carefully consider information contained in prospectus, including investment objectives, risk, charges and expenses. For a prospectus containing this and other important information, please visit the fund quote detail page at, or contact a ShareBuilder 401k representative at 1-800-943-6108 option 1. Please read the prospectus carefully before investing.

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Alison Cahill

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