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Insurance Products Still Have a Long Way to Go.

Many 401(k) plans are moving away from revenue sharing as sponsors and advisors cite the need for transparency and simplicity.  So called ‘clean shares’ have no revenue sharing whatsoever in them and make no payments to recordkeepers or advisors.  This is the wave of the future for both large and small plans using straight mutual funds, ETFs or CITs. Unfortunately, the same cannot be said for unbundled offerings using an insurance company platform and a local Third Party Administrator (TPA).  Very often the insurance companies have special arrangements with TPAs whereby revenue is shared (and hopefully disclosed).  Many (but not all) TPAs will offset their fees dollar for dollar with any revenue sharing.  However, the dollar amount of these payments to the TPA can vary greatly from one insurance company to another depending on the volume of business that TPA has with that carrier.  A TPA may receive 5 basis points from one insurance company for a given plan, while receiving 10 basis points from another insurance company for the very same plan. Even if the TPA offsets their fees with this revenue sharing, there may be more or less revenue available depending on the platform and the TPA.  To be fair, many