Vanguard believes that our total cost of ownership (TCO) approach provides a more complete and transparent comparison among recordkeepers. The TCO framework considers not only base recordkeeping fees but also ancillary fees and additional sources of revenue. Some providers, for example, use advice services to monetize participants and effectively subsidize recordkeeping fees in a way that can be unclear to plan fiduciaries. A provider may offer a low base recordkeeping fee, but its TCO may be much higher.
Our commentary, Vanguard’s Total Cost of Ownership Approach to Recordkeeping Fees, explains the TCO approach, including the effects of participant advice, and fiduciaries’ duties with regard to plan fees. It also presents a case study demonstrating how the TCO approach can help protect the plan and its fiduciaries from an increased risk of litigation.
Note:
- Advisory services are provided by Vanguard Advisers, Inc. (VAI), a registered investment advisor and an affiliate of The Vanguard Group, Inc. (Vanguard). Eligibility restrictions may apply.