OF THE AVERAGEOF THE AVERAGE

REALREAL

COST

The

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Why “Good Enough” Actually isn’t

The average retirement plan costs many businesses and plan participants millions in lower returns, reduced tax savings and higher fees for fewer services. Our guide will show you how to identify and fix the most common retirement plan blunders to help you and your employees create more wealth.

Death by 1,000 PapercutsSome employers believe it’s simply good enough to have a retirement plan. Box checked. The truth is, many retirement plan advisors take advantage of that mindset.

They sign you on to a plan that seems reasonable, but that’s stuffed with funds that carry high fees. They add on services that deliver commissions back into their pockets. They automate your plan so that they don’t have to spend a lot of time meeting with plan participants. And because the average plan advisor isn’t a retirement plan expert, they often miss opportunities to help business owners maximize tax advantages.

It’s not always obvious how your 401(k) is bleeding savings potential. But if you don’t stop it, you could lose big. The differences can seem subtle at first, but over time they add up to big disparities in how much money you and your employees have when it’s time to retire. As a result, your plan may be costing you a lot more than you think.

We’ve modeled the impact of an Industry Average Plan vs a Fisher Average Plan factoring in key differences across three drivers of wealth creation: deferral rate, fees and investment performance. As you can see, small improvements across these metrics can have huge impacts after 20 years for both average earning and high earning plan participants.

Industry

$261K

+190K

$451K

Fisher

Average Earner

Industry

$1.19M

+758K $1.95M

Fisher

High Earner

Potential Tax Deferred Retirement Plan Savings After 20 Years5

Better employee deferral rates and lower fund fees result in huge differences over time.

Investing in securities involves the risk of loss. Past performance is no guarantee of future results. Intended for use by employers considering or sponsoring retirement plans; not for personal use by plan participants.

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A Corrupt System That Puts You Last

A fiduciary is obligated to act in your best interest. Unfortunately, too many plan advisors see retirement plans as an opportunity to charge fees to pad their commissions or collect fees from plan partners.

Often a plan advisor will refer you to a recordkeeper, third-party administrator, and even a payroll company. What many plan advisors don’t tell you is that they have relationships with those service providers and often receive a fee for the referral. Many mutual fund companies also share revenue to incentivize plan advisors to pick their products. This sales-first atmosphere creates multiple conflicts of interest and can cause plan advisors to prioritize their fees over the service you need.

The result is that a significant portion of the average retirement plan’s fees are not working to generate wealth for you and your employees. Too many plans include bloated administrative costs and a lineup of funds that is more expensive than necessary.

In contrast, Fisher’s wealth generating advisory model focuses on you. Fees are clear and transparent and we never accept commissions. As a result, Fisher is 100% focused on helping you and your employees create more wealth.

Plan advisors who revenue share create a complicated system with many conflicts of interest

Fisher never accepts commissions or revenue sharing

Wealth Creation Tip #1

Hire a Plan Advisor who is a 3(38) fiduciary that does not accept revenue sharing.

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The chart below shows the impact of revenue sharing on plan fees.

• Wealth Generating Fees: Some fees are considered wealth generating because they pay for services thathave a direct impact on wealth creation. For example, meeting one-on-one with plan participants toimprove employee participation and participant savings rates.

• Non-Wealth Generating Fees: Other fees are considered non-wealth generating because they go to planadministration services that do not have a direct impact on improving wealth creation for plan participants.

In the example above, not only is the overall Industry Plan Fee average (1.49%) higher than the Fisher Plan Fee average (1.4%) but a much higher proportion of the fee goes to non-wealth generating services. This often occurs when a plan advisor receives revenue sharing from the Record Keeper, Third Party Administrator or the Fund Manager because the plan advisor is incented to recommend the partner that pays the highest revenue share versus the partner that provides the best services at the lowest cost.

Wealth Creation Tip #2

Hire a Plan Advisor that has a fee structure weighted toward wealth generating services.

INDUSTRY AVERAGE

Record Keeper & TPA Fee

FISHER AVERAGE

Plan Advisor & Fund Fee

NON-WEALTH GENERATING

WEALTH GENERATING

1.49% 1.40%

Record Keeper & TPA Fee Fund Fee Plan Advisor Fee Total

Industry Average .64% .43% .37% 1.49%

Fisher Average .33% .07% 1.00% 1.40%

AVERAGE PLAN FEE1

A plan advisory model that optimizes for wealth generation

76%57%

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Autopilot Plan Advisors Don’t Maximize SavingsWhen a plan advisor thinks of you as an ATM, customer service is a cost they want to avoid. That’s why the average plan advisor doesn’t invest time in providing premium service that helps you and your employees save more and invest smarter.

Many plan advisors don’t meet one-on-one with plan participants to empower them to create an investment strategy that is unique to their individual goals.

This lack of service translates into lower savings rates since many people don’t understand the impact that even small contributions have over time.

Did you know?

When COVID-19 hit, Fisher proactively reached out to 100% of plan sponsors and 29,000 plan participants to answer questions and provide proactive guidance, resources and tools.

INDUSTRY AVERAGE

60%

AVERAGE PARTICIPATION RATES2

FISHER CLIENT AVERAGE

69%

+14% HigherParticipationRates

INDUSTRY AVERAGE

7.1%

AVERAGE DEFERRAL RATES2

FISHER CLIENT AVERAGE

8.2%

+15% HigherDeferralRates

The chart below shows the impact of a “set it and forget it” approach on participation and deferral rates.

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3 Warning Signs of an Autopilot Plan AdvisorMost plan advisors administer fewer than ten 401(k) plans, so they lack the knowledge, resources and clout to champion your needs. As a result, your plan advisor may also be more focused on their more-profitable private wealth clients, especially if 401(k) clients like you only make up a small portion of their business.

A plan advisor should be proactively reaching out to offer guidance about your plan. They should also be talking to plan participants one-on-one to empower them to create an investment strategy that is uniquely tailored to their individual goals.

If your plan advisor isn’t doing this, they might be on autopilot.

Wealth Creation Tip #3

When vetting a Plan Advisor, ask them if they have a money-back service guarantee that they are willing to put in writing.

Reactiveapproach

If you have to call to find out what’s going on, your plan advisor may have other things on their mind other than your business.

While they may be available to take your call, that’s not enough. You want one who calls you first.

Distracted and scattered

Smaller plan advisors are pulled in many directions. They manage your plan, but they also have to run their business. They may ignore participants with lower plan balances, only focusing on those with large balances. A jack of all trades is a master of none.

A “set it and forget it” strategy

Many plan advisors take a “set it and forget it” strategy to managing your fund lineup. Plus, they don’t educate participants about the importance of asset allocation to meet long-term goals. This approach can be costly to you and your plan participants.

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Low-Quality, High Cost Funds Drag Down ReturnsConflicted plan advisors often fill 401(k) portfolios with low-quality funds because those funds deliver higher fees or larger commissions. Year after year, the performance of those portfolios lags behind similar funds, which adds up to thousands in missed savings.

Fisher analyzes over 25k potential options to find better funds at the lowest costs. Through a four-step process, Fisher thoroughly vets potential funds and makes strategic decisions about what to include in your lineup and continually monitors the fund line up to help ensure it is maximized to changing market conditions.

SELECT APPROPRIATE INVESTMENT STRATEGIES

25,000+ INITIAL FUND POSSIBILITIES

FUND ANALYSIS

FIT REVIEW

ACTIVE OR PASSIVE?

CATEGORY SELECTION

CONTINUOUS PROCESS REVIEW

SELECT FUNDS

ADD VALUE THROUGH ACTIVE OR PASSIVE MANAGEMENT

IDENTIFY BEST-IN-CLASS FUNDS

CURATE A FUND LINEUP TO MEET CLIENT OBJECTIVES

Fisher analyzes over 25k potential options to find the best funds

MORNINGSTAR AVERAGE

5.2%

MODEL PERFORMANCE3

FISHER MODEL AVERAGE

7.4%

Higher Investment Performance

INDUSTRY AVERAGE

.48%

FUND FEES4

FISHER AVERAGE

.07%

86% Lower Fund Fees

Fisher’s fund line up has higher quality funds at a fraction of the cost.6

Wealth Creation Tip #4

Benchmark your funds and your fees to ensure you aren’t overpaying for a sub-par fund line up. Contact us for a free investment and fee analysis.

October 2014 through December 2020. Past performance is no guarantee of future results. See page 12 for additional disclosures.

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Better Where It Matters MostSmall improvements in participant savings rates, plan fees and investment performance add up to significant incremental savings at retirement. As shown in the example below, an average plan could mean a high earning participant misses out on $785K at retirement.5

Total Fees1 Deferral Rate2

Industry Average 1.49% 7.1%

Fisher Average 1.40% 8.2%

ESTIMATED HIGH EARNER RETIREMENT SAVINGS5

Industry average Fisher average

$285,606

$515,221

$823,085

$1,193,879

$1,952,265

$342,706

$703,791

$1,232,785

YEAR 5 YEAR 10 YEAR 15 YEAR 20

Better possible participant outcomes

Salary: $275KStarting Balance: $100k

Wealth Creation Tip #5Beware of Plan Advisors that can’t or won’t quantify how they perform across three drivers of wealth creation- deferral rates, investment performance and plan costs.

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REQUEST CUSTOM ANALYSIS

Are you leaving money on the table?When you look at all the money left on the table with an average plan, it’s hard to see why anyone would settle for less.

Poor service, which leads to lower savings rates and lower performance, combined with high fees that take a big chunk out of your portfolio, result in less money at retirement. You’ve worked hard to get to this point. Now’s not the time to settle for less.

Contact us today for a to see how Fisher 401(k) Solutions can help you and your employees create more wealth.

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Endnotes1. Wealth-generating fees are defined as plan advisor fees & fund fees; non-wealth generating fees are defined as all other fees, including

recordkeeper and third party administrator fees. Industry Average data is based on Fiduciary Benchmarks, Inc Plan Profile Report for a$2mil 401(k) plan with 50 participants as of 12/31/20, The Industry Average fund fee (.48%) was calculated by taking 32% of the industry average total plan fees (1.49%), as this is the average proportion of the fee allocated to investment managers in the report. The Fisher Average fee (1.40%) represents the fees an average Fisher Investments 401(k) client would pay as of 12/31/20, based on a $2mil 401(k) plan with 50 participants; Ascensus for bundled recordkeeping (.33%); and the weighted average fund expense ratio based on actual client investment allocations (.07%) .

2. Industry Average rates based on the 2020 Vanguard Retirement Plan AccessTM Study-Small Business Edition. The Fisher Client Average rates are based on Fisher plans utilizing Ascensus as their recordkeeper as of 12/31/2020.

3. The calculations are based off the annualized return from October 2014 through December 2020 of the Fisher Investments models (and the closet equivalent Morningstar category) typically offered to plan participants: Fisher Investments 90% Equity, 10% Fixed Income(Allocation - 85%+ Equity); Fisher Investments 80% Equity, 20% Fixed Income (Allocation -70% to 85% Equity); Fisher Investments 70%Equity, 30% Fixed Income (Allocation - 50% to 70% Equity); Fisher Investments 60% Equity, 40% Fixed Income (Allocation - 50% to 70%Equity); Fisher Investments 50% Equity, 50% Fixed Income (Allocation - 30% to 50% Equity); Fisher Investments 40% Equity, 60% Fixed Income (Allocation - 30% to 50% Equity); Fisher Investments 30% Equity, 70% Fixed Income (Allocation - 15% to 30% Equity); Fisher Investments 100% Fixed Income (Intermediate Core Plus Bond). Past performance is no guarantee of future results. Returns shown above include cash and reflect the deduction of all fund-level fees and the reinvestment of dividends, interest, and other income. The model portfolio shown herein is available only to retirement plans receiving fiduciary and consulting services from Fisher Investments. Some sponsors pay fees for those services directly, but most will pay out of participant accounts, which reduces the net return to plan participants. The same is true for administrative or recordkeeping fees. Net returns shown above reflect the highest possible fee of 1.25% paid to Fisher Investments and cover services provided to the underlying funds as well as various other services provided to plans. Actual fees paid to Fisher Investments range from .25%-1.25% annually.

4. Source: Fiduciary Benchmarks (Plan Profile Report based on $2mil plan with 50 participants), Morningstar and FI360. The Industry Average fund level fee (.48%) is based on the average total plan fees (1.49%) and proportion of the fee distributed to investment managers (32%) in the sample. The Fisher Average fee graph represents the fees Fisher Investments’ Plan clients paid on averagefor fund management as of 12/31/20. The calculation is based on the assets within each fund and the fund’s expense ratio as of the same date. Certain funds within the Fisher lineup are available only to retirement plans receiving fiduciary and consulting services from Fisher Investments. Fisher receives no revenue from those funds, but Fisher receives a fee for its services ranging from 0.25% to 1.25%annually.

5. Fisher Average savings calculation projects an annual return equal to the historic annualized return of each model portfolio that a 401(k) Solutions participant would be defaulted into starting at age 45 to 65 and using the Fisher Investments age-based QDIA solution, with fee and deferral rates, salary, and starting balance as specified on page 5 and 7. High Earner assumes $275K annual salary and $100K starting balance. Average earner assumes $50K annual salary and $25K starting balance. Industry Average savings calculation projects an annual return equal to the historic annualized return of the Morningstar category average return for the most applicable target date vintage over time, with fee and deferral rates, salary, and starting balance as specified.

6. Fund quality is calculated using the Fi360 Fiduciary Score® . Industry Average is based on data gathered for 100+ retirement plans considering hiring Fisher between January 2020 and May 2020 and measured by the Fi360 Fiduciary Score® . The Fisher Average is based on the mean of the Fisher proposed fund line up for 100+ retirement plans considering hiring Fisher between January 2020 and May 2020 and measured by the Fi360 Fiduciary Score® . The Fisher line up is as of 12/31/2020 and measured by Fi360.

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