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You asked, we listened: an update to Guideline’s fees
Company news 401(k)

You asked, we listened: an update to Guideline’s fees

Jeff Rosenberger, PhD

When Guideline was created 5 years ago, we wanted to introduce a software pricing model for 401(k) plans, charging employers a flat monthly fee based on the number of participants while avoiding fees based on assets under management (AUM). These fees, usually a small percentage of the account balance, can seem trivial, but over the long haul they really add up. A 1.68% AUM fee, which is the industry average for small 401(k) plans, can end up costing participants hundreds of thousands of dollars over the span of a career. To us, AUM fees charged by many providers are exorbitant. So we didn’t charge them. But we did charge small fees for one-off services. Things like rollovers, distributions, loans, and plan wind-downs. Our thinking was these fees would, in part, help us facilitate necessary services without eating away at people’s savings.

Over time, we’ve heard from some of our customers that these additional 401(k) fees occurred at a time of financial stress, like changing jobs, needing a loan, or even closing down a business. We received feedback that our “small” fees were adding up. This goes against our brand promise of creating a retirement platform that puts small business owners and their employees first. So we’re making a change.

Starting today, we’re eliminating transaction fees. And we’re introducing a 0.08% account fee.

A fraction of a percentage will have a big impact

Yes, our account fee is based on assets under management, but our AUM fee isn’t like most other providers. At 0.08%, our account fee comes out to about 67¢ a month for every $10,000 saved. This fee is intended in part to offset separate transaction fees, among others, which means no disbursement, loan, or rollover fees for employees, no plan termination fees for employers, and more. It can all add up to significant savings in individual fees.

Here’s a look at the fees you WILL NOT be charged for.

It’s important to mention that we’ve always been bullish on minimizing fees and increasing affordability. It’s in our company DNA. It’s why we’ve never charged certain fees, such as custody fees, 5500 preparation fees, 1099R preparation fees, and more. And it’s why we’ve never forced plan sponsors to choose more expensive plans for services like IRS filings and 3(38) and 3(16) fiduciary services.

Our managed portfolios have a blended average mutual fund expense ratio under 0.07%. When combined with our 0.08% account fee, the total fees for our managed portfolios are about 10x less than the industry average of 1.68%. We’ve always been proud to help provide our customers with significant savings on their road to retirement. Today marks another big milestone on that journey.

Learn more about our fees and services