Revenue Sharing FAQ's

Revenue sharing can be a complex topic, especially when it comes to accurately benchmarking retirement plan fees. Historically protected by confidentiality agreements, revenue sharing, which includes 12b-1 fees and shareholder service fees, became public information following the ERISA § 408(b)(2) changes in July 2012.

To help you manage fee reasonableness, PlanTools incorporates this data into its benchmarking solution. Here is a guide on how our revenue-sharing database works and how it is applied within the system.

Where the Data Comes From and Its Reliability

• PlanTools receives revenue-sharing data directly from trading platforms, TPAs, or advisors.
• We request that this data be updated semi-annually or whenever significant changes occur.
• PlanTools cannot guarantee the accuracy of this data, as revenue-sharing amounts frequently change due to investment company growth objectives or changes in business volume.
• All users are required to verify the accuracy of the revenue-sharing amounts reported in their reports.

How Revenue Sharing is Used in PlanTools

PlanTools simplifies the complexities of revenue sharing to help you conduct accurate benchmarking studies.

• The system segregates revenue sharing from the operating expense ratio (OER) of each fund held by the plan.
• These segregated amounts are identified in both total dollars and as a percentage of plan assets.
• Users can then assign these amounts to the specific covered service provider who receives the fees, or identify amounts reallocated back to the funds.

Understanding the Net Weighted Operating Expense Ratio (OER)

• When viewing the Investment Management service category, you will see a metric called the “Net Weighted Operating Expense Ratio.”
• This value is calculated using a weighted average of all investments within the plan.
• The OER is “net” because it removes all revenue sharing, including 12b-1 fees.
• This metric reflects only the cost of managing the money.
• All other indirect fees are removed from the Net Weighted OER and reallocated to the respective service categories they pay for, such as recordkeeping or advisor services.

Managing ERISA § 408(b)(2) Disclosures

You can easily incorporate your ERISA § 408(b)(2) disclosures directly into your PlanTools benchmarking reports to satisfy compliance obligations at the point of sale.

• Custom disclosures can be added to any report page by navigating to the ADMIN tab and then accessing Scenarios.
• PlanTools allows you to set up multiple 408(b)(2) scenarios depending on the engagement type.
• Any customized wording or recommendations added to your reports must be reviewed by your compliance officer or ERISA counsel prior to use.

Database Updates and Benchmarking Universes

To ensure your reports reflect relevant market conditions, the PlanTools database follows a strict refresh schedule and categorization logic.

• Database statistics are recalculated every day at 1:00 AM to account for new plan entries or changes.
• Any plan data not benchmarked within a 3-year period is automatically removed from the system.
• Our benchmarking universes divide plans into 13 distinct asset-size ranges and 12 distinct participant-count ranges.
• Asset sizes and participant counts are benchmarked separately to account for the growing trend of recordkeepers utilizing flat fees rather than asset-based pricing.