Guideline Fees & Costs Update: You Asked and we Listened

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%¹ 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.² 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%.³ 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%.⁴ 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

¹The average investment expense of plan assets for 401(k) plans with 25 participants and $250,000 in assets is 1.68% of assets, according to the 20th Edition of the 401k Averages Book, with data updated through September 30, 2019, and is inclusive of investment management fees, fund expense ratios, 12b-1 fees, sub-transfer agent fees, contract charges, wrap and advisor fees or any other asset based charges.

²This information is for illustrative purposes only and does not represent the actual costs you may incur as a Guideline client. Information shown here assumes a static balance of $10,000 per month, an annual account fee of 0.08% on assets under management (calculated and deducted on a monthly basis at 1/12 of the annual stated rate (0.08%)) based on the month-end account balance, and does not account for common factors that affect the value of your account balance over time such as gains, losses, distributions, additional contributions, etc., and is not intended to constitute investment advice nor an assurance or guarantee of future performance. The fee presented does not include other fees that a 401(k) participant may incur, including, but not limited to, from mutual fund expense ratios and a monthly maintenance fee to participants who end employment.

³Guideline’s managed portfolios have blended expense ratios ranging from 0.064% to 0.07% of assets under management. Expense ratios for custom portfolios will vary. These expense ratios are subject to change by and paid to the fund(s). View full fund lineup here.

⁴With respect to the representation that the total AUM fees for our managed portfolios are about 10x less than the industry average: This information is provided for illustrative purposes only, and is not intended to be construed as investment or tax advice. We recommend that you consult a qualified tax and financial advisor to determine the appropriate investment strategy for you. With respect to the industry average fee of 1.68%, please reference footnote 1.