401(k) providers charging higher fees to small businesses owners
Small business owners have a tough time setting up retirement plans for their employees as they face higher fees than larger corporations.
However, America’s Best 401K is disrupting the retirement savings business by offering a low-cost investment strategy for small business owners.
“The financial services industry doesn’t want to offer those plans to small business because they can’t make a buck on it,” CEO Tom Zgainer said.
Zgainer said small business owners have been told they don’t qualify for low cost investments. In addition, more than 70% of 401(k) participants are unaware they are paying excessive fees.
“What we see are these companies that have 1.5% to 3% in investor-related fees that are essentially devastating,” he said.
America’s Best 401K has developed a plan that keeps investment-related fees at a lower rate while removing the fiduciary liabilities of the sponsored plan. According to Zgainer, the plan allows businesses to provide one-to-one advice with participants.