As a plan sponsor, it’s your fiduciary duty to understand the fees associated with your plan and if they are reasonable. This is one of the largest areas where breach of fiduciary duty lawsuits originate. There’s several levels of fees.
An understanding of how service providers, record keepers and/or custodians are compensated in the form of fees is crucial. As a plan grows in size, the relative cost to administer the plan should go down. It’s incumbent upon the plan sponsor, or if relying on an advisor for the plan, to negotiate lower fees on behalf of the plan and participants.
It’s a plan sponsor’s responsibility to know how an advisor is being compensated. If it’s upon the investments they recommend, are they being paid a commission? If there’s an inherent conflict of interest in their recommendation, then you need to recognize and resolve that issue.
There are also investment expenses, the cost associated with the internal operating expense of each of the investments. Are you using the lowest possible share class within each fund?
A reasonable amount of fees is a range or zone not necessarily a target number. That meaning, it’s all relative to the plan. It’s not about absolute cost, advisors and investors should consider the fees for services in light of what’s available in the marketplace.