Reconsidering Revenue Sharing: Why Retirement Plan Sponsors Should Consider Breaking the Link between Investment and Plan Costs

Abstract

Revenue sharing, the part (or “share”) of an investment manager’s expense that can be used to pay retirement plan costs, remains a common practice among defined contribution (DC) plan sponsors. This article looks at the reasons why revenue sharing arrangements should be reconsidered in light of increased legal scrutiny of the reasonableness of fees and the spirit of transparency motivating recently required disclosures to plan sponsors and participants.