Beyond Benchmarking: What Plan Comparisons Can’t Tell You About Your Retirement Plan

If you spend enough years reviewing Form 5500 filings, you begin to notice things that do not fit neatly into a benchmarking report. That was not where this research started. When I began reviewing retirement plans in 2009, I was simply trying to understand why employers with seemingly similar plans often paid very different amounts for what appeared to be similar services. Over time, that work expanded into industry specific research databases that now include more than 500 law firms, hundreds of medical practices, engineering firms, manufacturers, construction companies, financial firms, schools, nonprofit organizations, and many other sectors. As additional years of Form 5500 filings accumulated, those databases gradually became useful in ways I had not anticipated. Instead of simply organizing retirement plans by industry, they began preserving the history of individual provider relationships.

During those same years, retirement plan benchmarking evolved into a remarkably sophisticated discipline. The leading benchmarking organizations no longer compare fees alone. They maintain independent databases containing hundreds of thousands of retirement plans and provide investment lineup analysis, managed account benchmarking, plan design evaluation, retirement outcome modeling, fiduciary process reviews, provider comparisons, research and analytics, decision support tools, rollover analysis, technology platforms, and a variety of services used by advisors, consultants, recordkeepers, broker dealers, banks, third party administrators, asset managers, defined contribution investment only teams, and plan sponsors. Their work also recognizes that fees should not be evaluated in isolation, but alongside services, plan complexity, participant outcomes, and the value participants receive in return. Much of that work is also designed to help fiduciaries document prudent decision making, evaluate providers more systematically, and improve participant outcomes over time. Retirement plan benchmarking is considerably more sophisticated today than it was even a decade ago.

Looking back over ten or fifteen years of Form 5500 filings often revealed patterns that were difficult to see in a single year's benchmark. Compensation increased while participant counts changed very little, assets appreciated, employer and employee contributions rose and fell, providers changed, and pricing arrangements evolved. Looking at those histories year after year naturally raised questions that were different from the questions benchmarking was designed to answer.

The leading benchmarking services generally help employers answer questions such as:

How do our fees compare with similar plans?
How does our investment lineup compare?
Is our plan design competitive?
Are participant outcomes improving?
Does our fiduciary process reflect current best practices?
Are services consistent with the compensation being paid?
How does our provider compare with similar providers?

The historical record kept leading me back to a different set of questions.

How many hours did the advisor actually spend servicing the plan last year?
How has provider compensation changed over the last ten or fifteen years?
If plan assets doubled, why did provider compensation also double?
When was provider compensation last negotiated?
Does today's compensation still reflect the work being performed?
How did plan assets, participant counts, employer contributions, and employee contributions evolve over time?
When did providers change?
Were observable changes in services accompanied by observable changes in compensation?
How has the purchasing history of this retirement plan evolved?

One law firm in the database illustrates the distinction. Between 2017 and 2024, Levin Ginsburg's retirement plan grew from approximately $7.9 million to $11.9 million while participant counts remained relatively stable, ranging from 18 to 24 participants. During the same period, the amount reported on Form 5500 Line 8f for Administrative Service Providers increased from $35,323 to $87,232. A sophisticated benchmarking report could reasonably conclude that the current compensation falls within a normal range for comparable law firms. The historical record, however, still leaves important questions unanswered. What changed? Were materially different services introduced? Was substantially more advisor time devoted to the plan? Was compensation renegotiated? Did participants receive value commensurate with the additional dollars leaving their retirement accounts?

Reviewing these histories also changed the way I thought about pricing. Retirement plan fees are usually discussed as percentages because that is how much of the industry prices its services. Business owners, however, purchase almost every other professional service in dollars. They compare accounting fees, legal fees, payroll providers, software subscriptions, and consulting engagements by looking at annual costs, proposals, and invoices. Expressing retirement plan costs in annual dollars often changes the conversation because employers begin evaluating those relationships using the same purchasing discipline they apply everywhere else.

That distinction also helped separate what is common from what is reasonable. Benchmarking is exceptionally good at showing what is common among comparable retirement plans. Whether a pricing arrangement continues to represent good value after years of asset growth, stable participant counts, and relatively unchanged service demands is a different question, particularly when much of the compensation is being deducted directly from participant accounts.

For the sponsors of smaller retirement plans, particularly those with fewer than one hundred participants, which represent nearly ninety percent of all retirement plans, comparing today's retirement plan with similar plans is only part of the evaluation. Looking back at the history of the relationship between compensation, services, participant counts, and participant value provides another perspective, one that can help employers decide whether participants continue to receive good value for the dollars leaving their retirement accounts.