A Professor Puts the Scare in Plan Sponsors

July 22, 2013 | | Morningstar |

Ian Ayres of Yale University has the 401(k) marketplace fuming.

Using data provided to him by a firm that collects information on 401(k) plans,Brightscope, Professor Ayres has calculated the fees paid to plan providers by 46,875 (!) companies. The professor sorted the companies by the assets of their funds into various size buckets and then ranked the companies in each bucket from top to bottom according to how much they paid.

Soon, he says, he will name names. Apparently, he has mailed letters to several thousand plan sponsors that have above-average costs in his study, warning them that he will publish this data in spring 2014.[...]
 
This is the third major salvo fired at the 401(k) industry over the past 14 months. In May 2012, the think tank Demos released The Retirement Savings Drain: The Hidden & Excessive Costs of 401(k)s. You needn't read further than the paper's title to know that the industry received a damned good whacking. This April brought PBS FrontLine's equally scathing The Retirement Gamble. Now we have the professor's letters.