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Hidden Figures (Gwen Moritz Editor’s Note)

3 min read

If you haven’t seen “Hidden Figures,” grab the family and get to the theater. The story of three African-American women whose behind-the-scenes work helped the U.S. of A. retake the lead in the space race of the 1960s is educational and uplifting and a reminder that there is dignity in doing our best even when credit and reward are not doled out fairly.


I wrote an article for last week’s issue on a couple of central Arkansas firms, Fiduciary Wealth Management and CFO Network, that have begun offering 401(k) fee analysis as a service. As I disclosed in the article, this was a service that my employer, Arkansas Business Publishing Group, hired CFO Network to perform last year. The analysis confirmed what we had suspected: Our company and our employees were paying higher fees than we were comfortable with. That experience was what made me want to write a story about the availability of this service, and not only from the vendor that we happened to use.

Now, 401(k) fees are not really hidden figures. A federal regulation that took effect in 2012 requires full disclosure. But there are several categories of fees being divided up among several players, so some level of familiarity with the way plans are set up is required just to find all of the fees. And when you get the fees rounded up, it’s hard to know whether they are reasonable or not. Even numbers that seem fairly small eat away at one’s retirement savings, both in direct costs and by reducing the compound earnings potential over time.

Companies provide 401(k) plans for all the right reasons — to attract and retain the best employees and to make it possible for them to be secure in their old age. But in doing so, employers also take on a fiduciary responsibility for making smart choices, since employees have to accept the terms of the plans in order to get the tax advantages and any matching money.

Making sure that you and your employees are not overpaying, then, is not just good management. It’s your legal responsibility.

This kind of talk must be depressing for the providers of 401(k) services and investments, since it continues the downward pressure on the fees they’ve grown accustomed to collecting — a “Who Moved My Cheese?” moment that has lasted years now and may be reaching the bottom now that the 401(k) industry has had about 30 years to mature. Fair market value is only achieved when a market is transparent and competitive.

(Plus, there are still companies that haven’t reviewed their plans in a long time, and they may be in the same situation as my friend who refinanced his mortgage in 2016 — for the first time since 1998. Ouch.)


You may have read in the Arkansas Democrat-Gazette last month that the state board that administers health insurance plans for state and school employees had been blindsided by fees adding up to almost a quarter of a million dollars. That’s a $16 transfer fee charged by Bank of New York Mellon for each of the 14,000 employee health savings accounts being transferred to a new HSA provider, DataPath of Little Rock.

The State & Public School Life & Health Insurance Board voted to pay the fee “under protest.” I don’t have enough information to form an opinion on the size of the fee or whether it was properly disclosed, but it does illustrate that small numbers multiplied by large numbers become huge numbers. Wal-Mart used this principle to squeeze costs out of the supply chain, and did it so effectively that it’s sometimes known as “the Wal-Mart effect.”

But costs can also be added in tiny little increments, small fractions of a percent here and there, and they add up just as surely as savings until the figure is so big it can’t be hidden.


Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com.
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