Benchmarking Fees vs. Evaluating Providers: Why Both Matter — and Why Sponsors Confuse Them
Why Fees Are Only One Part of Fiduciary Oversight
Most sponsors believe they’re compliant if they benchmark fees every few years.
But benchmarking alone doesn’t answer:
Is the vendor capable?
Is the service model aligned?
Are there conflicts of interest?
Is this still the best choice for our plan?
Courts and regulators expect a holistic, impartial evaluation, not just a spreadsheet.
Fee Benchmarking Alone Leaves Major Gaps
Benchmarking does not evaluate:
Service quality
Staffing levels
Technology platforms
Operational performance
Contractual protections
The DOL expects sponsors to evaluate services and fees to ensure they are “reasonable”. Benchmarking typically only covers the cost side of the expectation.
You could have “reasonable fees” and still fail fiduciary scrutiny if the vendor isn’t meeting the plan's needs.
What a True Provider Evaluation Looks Like
A compliant evaluation includes:
Capabilities Analysis
Are the vendor’s resources sufficient for your plan size and complexity?
Service Model Alignment
Does the provider’s structure fit your culture and needs?
Technology Review
Is the platform competitive, secure, and efficient?
Operational Metrics
What does performance data show about accuracy, responsiveness, and participant outcomes?
Evaluations tell the full story — benchmarking tells only one chapter.
The Danger of Relying on Vendors to Provide Their Own Comparisons
Vendor-supplied benchmarking often:
Excludes key competitors
Uses selective data
Minimizes gaps
Emphasizes strengths rather than neutrality
It may be informative, but it cannot be independent.
Why Both Benchmarking and Evaluation Must Work Together
Together they provide:
Cost clarity
Operational insight
Fiduciary defensibility
Documentation that withstands scrutiny
Sponsors need both — and courts expect both.
The Complete Picture = Protection
When you combine benchmarking + full evaluation, you get the clarity, neutrality, and documentation required for fiduciary safety.
📩 Ready for an independent evaluation that goes beyond fees? Let’s talk.