Open Architecture 401(k) Provider Releases First-Of-Its-Kind All-In Fee Calculation


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“Personalized Expense Ratio” Combines Fees Paid with Investment Expenses to Present Complete Plan Cost to Advisors, Plan Sponsors, and Participants

DENVER, July 13, 2011 /PRNewswire/ — Lincoln Trust Company, a leading provider of open architecture 401(k), profit sharing and self-directed IRA solutions, today introduced the Personalized Expense Ratio (PER),one of the retirement industry’s most precise all-in 401(k) plan cost calculations.

Available exclusively on the Lincoln Trust 401(k) platform, PER is intended for participants, plan sponsors, and advisors to see the actual cost of their plans without having to perform calculations themselves.

The new Lincoln Trust enhancement was designed to go beyond the Department of Labor’s (DOL’s) recent revisions to 408(b)(2) and 404(a)(5) reporting requirements. Neither regulation calls for the calculation and display of a plan’s or a participant’s total plan cost.

“We didn’t think that the DOL regulations went far enough to provide a clear understanding of the true cost of a 401(k) plan,” says Tom Gonnella, senior vice president of Corporate Development for Lincoln Trust Company. “Our ‘Personalized Expense Ratio’ was designed to provide a more precise calculation by including investment expenses and aggregating fees from multiple service providers.”

Lincoln Trust’s is one of the first platforms to combine actual fees paid with investment expenses in a single calculation, both for the individual participant and for the entire plan. Fee categories include recordkeeping, advisor, TPA, and investment expense fees, as well as revenue sharing offsets. PER also calculates and displays investment costs using a participant’s average daily balance rather than just period-end balance.

“Our due diligence process takes a lot of effort, and PER goes a long ways toward reducing the work load,” says Paula Hendrickson, Director of Retirement Services, First Western Trust, “More than that, PER’s transparency and benchmarking gives us a greater level of understanding of a plan’s fees, both absolutely and relatively.”

Notably, the disclosure of investment costs actually incurred by participants–typically the single largest plan expense–is not required by DOL regulation. According to a study by Deloitte and the Investment Company Institute, investment expenses account for 74% of a plan’s “all-in” cost. The DOL only requires the disclosure of the expense ratios and the amount per $1,000 that it would cost participants to be invested in the fund, leaving the burden on the participant to perform the calculations to determine their investment expense.

“We don’t believe that participants, plan sponsors or advisors should have to wonder what they’re paying for their 401(k) plans,” says Mr. Gonnella. “And we don’t think each party should be burdened with having to perform this calculation themselves. With PER, Lincoln Trust provides all the information in a simple to understand figure along with a relevant benchmark.”

With more than 2,000 qualified plan clients and $7.6 billion in retirement assets, Denver-based Lincoln Trust ranks among the nation’s largest independent providers of trust and custodial services. A member of the Council of Independent 401(k) Plan Record keepers, the firm was recently awarded the Gartner Business Process Management Excellence Award.

About Lincoln Trust Company

Located in Denver, CO, Lincoln Trust provides trust, custodial, recordkeeping and administration services to open architecture 401(k) plans and other defined contribution plans. By providing access to 24,000 mutual funds and 900+ETFs without any proprietary product requirements and by using all revenue sharing payments to offset plan expenses, Lincoln Trust is able to offer low cost 401k plan solutions to advisors and plan sponsors in the small and mid-size plan markets. Lincoln Trust is also a leading independent provider of self-directed IRAs. For more information, visit or call 1-855-719-5796


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