When the 401(k) retirement plan was born in 1981, it wasoriginally designed as a way for employees to defer extra savingsor bonus money on a pre-tax basis. Today, the 401(k) has eclipsedthe traditional defined benefit (DB) plan to become the primaryvehicle for financing retirement in America.

According to an AARP study, 401(k) plans are estimated to cover69 percent of the work force that participates in anemployer-sponsored plan, while the coverage of DB plans has shrunkto 31 percent. As financial advisors, it's our duty to ensurethat participants are educated about the importance of utilizingtheir 401(k) to create Paychecks for Life®. However, it's alsoour duty not to charge excessively high plan fees, especially sincethose fees will need to be disclosed in 2012.

When you're educating plan participants and helping to create astable financial future for them, you may find it difficult todetermine the amount for reasonable plan fees. Because excessivelyhigh plan fees can eat into the accumulating balance ofparticipants, the income that balance can sustain into retirementcan be much lower than expected. How advisors can determine what isreasonable is hotly debated within the industry.

Advisors can charge more than their competition if they providemore substantial services. The problem isn't in charginghigher prices, but in deciding what makes certain services more“substantial.” Providing participant education and investmentadvice can be value-added services; however, it's difficult toquantify the impact these activities may have.

Service level agreements offer one solution to this issue. Byoutlining plan sponsor meetings and educational programs that wouldoccur throughout the year, advisors can assure their plan sponsorsand participants that they have their best interests in mind, evenif it means higher plan fees. By offering knowledgeable financialand investment advice, these gatherings can give ample opportunityto generate further business on an individual basis. Not only willadvisors be fulfilling their obligation to help create a Paychecksfor Life® for plan participants, but plan sponsors and participantswill also be more likely to make use of their advisor’s otherservices.

In the future, legislators may determine exactly what'sreasonable for a financial advisor to charge in plan fees. However,the current situation allows advisors to charge what they want,even if it is excessive. High fees can damage the growth of planparticipants’ Paychecks for Life® and this can ruin opportunitiesfor participants and advisors alike. By detailing services andholding plan sponsor meetings and participant education sessions,advisors can increase their plan fees while differentiating theirservices from the competition.