Not so long ago, it was common for plan sponsors to observe a three-to-five-year “rule” when it came to conducting a fee-benchmarking analysis. But the “rule” was always more of a guideline. In recent years, plan sponsors have increasingly prioritized fee benchmarking on an annual basis.  

According to the Callan Institute’s 2026 DC Trends Survey, roughly 70% of plan sponsors had reviewed their plan’s recordkeeping fees within the past year. (And more than 95% had done so within the past three years.) That’s a sharp increase from 2023, when Callan’s annual survey reported half as much annual fee-benchmarking activity.  

One reason for the increased focus on benchmarking is self-preservation: More recently, plan sponsors and employers have faced growing scrutiny of the fees charged by plan service providers. That trend has been driven, in part, by an uptick in litigation alleging excessive fees. Regular benchmarking reports are a way to show plan sponsors are fulfilling their fiduciary responsibilities, demonstrating prudence, and prioritizing transparency.  

However, the value of regularly conducting a fee benchmarking analysis goes beyond checking a fiduciary box. When done thoughtfully, fee benchmarking can play an important role in the overall health and longevity of a well-run retirement plan.  

What Does Fee Benchmarking Actually Measure? 

At its simplest, fee benchmarking is a comparison between the fees your retirement plan charges and those charged by similar plans for comparable services. However, a meaningful benchmarking analysis should go beyond a single number. 

A retirement plan can have several different categories of fees, including: 

• Recordkeeping and administrative fees: The costs associated with maintaining participant accounts, processing transactions, providing communications, and performing other administrative functions 
  
  

• Investment management fees: The expenses associated with managing the investment options offered through the plan 
  
  

• Advisory and consulting fees: The fees paid to investment advisors, consultants, or other professionals who provide services to the plan 
  
  

• Other indirect costs: Certain arrangements may involve additional sources of revenue or compensation, such as revenue sharing or fees for other plan services 
  
  

Each of these costs should be considered in the context of the services the plan receives. For example, a plan with a somewhat higher recordkeeping fee may still provide better value if that fee includes a broader range of participant services, technology, or administrative support. 

That’s why benchmarking is not simply a matter of asking, “Are our fees low enough?” The more useful question is: “Are our plan’s fees reasonable for the services and value we receive from providers?” 

What Plan Sponsors Should Look For 

A benchmarking report can contain a lot of information, but not all comparisons are equally meaningful. 

One of the most important considerations is ensuring the plan is compared with the right peer group. A large plan with thousands of participants and significant assets may have access to pricing that would not be available to a smaller plan. Likewise, a plan with a complex investment menu or extensive participant services may reasonably have different costs than a simpler plan. 

The analysis should also account for the different ways fees can be structured. Focusing solely on a fund’s expense ratio or a recordkeeper’s stated fee may not provide a complete picture. For example, indirect compensation and revenue-sharing arrangements can affect the actual economics of a plan and should be understood when evaluating costs. 

Plan sponsors should therefore ask several questions when designing and evaluating a benchmarking report: 

• Are we comparing our plan with genuinely comparable plans? 

• Are all sources of plan compensation and revenue being considered? 

• Are we looking at both administrative and investment-related fees? 

• What services are included in the fees we pay? 

• Are participants receiving meaningful value from those services? 

• Have the plan’s needs changed since the last benchmarking exercise? 

• Are there opportunities to improve services, negotiate fees, or restructure the plan? 
  
  

These questions can turn a benchmarking report from a compliance document into a useful management tool. 

Benchmarking Should Be Part of a Broader Fiduciary Duty 

Perhaps the most important consideration is what happens after the benchmarking report is delivered. A report showing that a plan’s fees are higher than those of a peer group does not automatically mean the plan is paying too much. Conversely, a report showing that fees are below average does not necessarily mean the plan is being managed effectively. 

The data needs to be interpreted. Every fiduciary has an obligation to act solely in the best interest of plan participants. However, at times, by focusing solely on cost-cutting, a plan sponsor might fall short of their fiduciary standards.  

Plan sponsors should consider the reasons behind the numbers, evaluate the services being provided, and determine whether changes are warranted. If a decision is made to retain an existing provider or fee structure, the reasoning behind that decision should also be documented. 

This is where an experienced retirement-plan advisor can provide value. Rather than simply producing a benchmarking report, an advisor can help a plan committee understand what the data means, identify potential areas of concern, and put the findings into the broader context of what benefits participants. 

Turning Benchmarking Into an Opportunity 

Fee benchmarking may have started as a periodic exercise designed to help plan sponsors demonstrate fiduciary prudence. Today, it can be much more than that. 

Done properly, benchmarking gives plan sponsors an opportunity to step back and look at the retirement plan as a whole. Are participants receiving the services and support they need? Are investment expenses reasonable? Is the plan paying competitive rates?  

Those questions can lead to better decisions, not simply lower fees. 

Take The Next Step 

If you haven’t benchmarked your retirement plan’s fees recently, now may be a good time. At Faubourg, we work with plan sponsors on benchmarking as part of a broader approach to retirement plan management. Our goal is to help employers understand not only what their plan costs but also what they receive in return. Reach out to us today to schedule a meeting.