Fee Benchmarking: How to Know If Your Plan Is Still Competitive in 2026

The importance of fee benchmarking has grown rapidly in recent years. According to a 2025 survey by the Callan Institute, roughly 70 percent of plan sponsors benchmark costs and evaluate fees every 12 months (up from 35 percent in 2023), rather than on the traditional 3- to 5-year cycle.

One big reason for the rise in benchmarking is a matter of self-preservation: There’s been a recent explosion in lawsuits related to the Employee Retirement Income Security Act (ERISA), including a trend in which plaintiffs are suing their employers and/or 401(k) plan sponsors for excessive service fees or administrative costs. Regular benchmarking reports are a way to demonstrate fiduciary prudence and transparency.

That being said, compliance is only one piece of the picture. Benchmarking plays a broader role in managing a plan, offering insight into performance and cost efficiency, including an in-depth look at what you’re paying compared to industry averages and peer plan costs.

The value of benchmarking

Outside of compliance, people often mistakenly think that the goal of benchmarking is to trim costs and cut corners. In reality, benchmarking is just as much about finding out what’s working well with your plan — such as value, the reasonableness of certain costs, and alignment with participant outcomes — as it is about identifying weaknesses.

When approached thoughtfully, fee benchmarking is not about finding the cheapest way to manage a plan. Rather, it’s a beneficial tool that promotes the well-rounded health of a plan, helping sponsors and fiduciaries along the way:

• Insights: Benchmark data analysis provides data-driven insights that support more informed, accurate, and effective decision-making across the board.
• Opportunities: Comparing performance against industry standards helps identify gaps and the potential for targeted improvements.
• Risk Mitigation: Early identification of potential risks through benchmark analysis supports proactive risk management and reduces surprises.
• Client Talking Points: Benchmarking is not just about internal decision-making; it helps demonstrate the value clients are already receiving. The analysis can produce items that will build trust and confidence in your management.

Ultimately, a competitive plan should consider a mix of fees, expenses, and results in its management approach — a balance that can be strengthened through benchmarking. 

Common benchmarking errors

Many plan sponsors receive benchmarking reports from a data analyst but do not fully understand them, which can reduce their decision-making effectiveness. There are many common mistakes that plan sponsors, HR professionals, and other managers regularly make, including:

• Wrong Parameters: Many sponsors focus on recordkeeping and/or vendor costs in their analysis, but investment fees also deserve careful consideration.
• Hidden Variables: Cost comparisons aren’t always as straightforward as they seem. For example, a fund’s total expense ratio can be misleading because it may include revenue sharing — rather than a direct cost of managing the fund — and distort the results. Failing to isolate the net investment fee from revenue sharing can lead to incorrect benchmarking conclusions.
• Data Visualizations: Maps and graphs can save time and improve benchmarking comprehension, but only if leaders are confident in interpreting them.
• Bargain Shopping: The lowest fee isn’t always the best value; sponsors should consider both cost and services received. Investment fees, for example, should be evaluated in context with performance — a higher fee can be reasonable if the fund delivers returns that justify the cost.
• Infrequency: Data can quickly become outdated. Reviewing benchmarking reports on an annual basis, or even more regularly, can be a competitive advantage.

Especially as a plan’s complexity increases and participant expectations rise, outdated or misinterpreted benchmarking reports can contribute to issues such as higher costs and fiduciary risk.

How to strengthen your benchmarking strategy

Regularly reviewing your fees isn’t just smart as a plan sponsor — it’s a core part of acting responsibly as a fiduciary. However, the process of recognizing gaps and identifying value can be time-consuming and, at times, contribute to an administrative burden. 

As a result, plan sponsors are increasingly becoming a well-aligned partner for help. At IMA Retirement, we specialize in streamlining the cumbersome areas of your plan management, including data analytics such as fee benchmarking. We’ll simplify the process and enhance insights by focusing on an industry-leading approach to:

• Translate reports into clear, sponsor-friendly insights
• Isolate risks without overlooking hidden variables
• Compare fees in the context of services, outcomes, and plan design
• Identify opportunities to improve or bolster value, not just reduce cost
• Document decisions in a way that protects fiduciaries and broadens oversight

IMA Retirement’s role

IMA helps sponsors move beyond surface-level benchmarking. It’s time to start reviewing your plan’s fees with intent — benchmarking true value, not just demonstrating compliance.

We’re here to help. Schedule a time to discuss your plan management needs with us. 

For assistance with your retirement needs, contact an IMA Retirement advisor at retirement@imacorp.com or call 877.305.1864.