Concealed deals drive up 401(k) fees
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Updates every hour. Last Updated: 8-Nov-2025 06:11 ET (8-Nov-2025 11:11 GMT/UTC)
In 401(k) plans, one of the attractions has always been that employees choose where to invest their retirement funds. The average plan offers 28 options, according to the Investment Company Institute.
Employees might assume those options are picked to serve their best interests. But new research from Clemens Sialm, professor of finance at Texas McCombs, suggests they’re also serving someone else’s interests. Many funds are paying plan administrators to include them in a plan’s menu, a practice called revenue-sharing.
The result: Without knowing it, employees may be offered funds with higher fees and lower performance.
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