But that's not the most "all-in" devastating characteristic of the "all-in" fee. The biggest issue remains how the "all-in" fee treats investment fees – it includes a mutual fund's expense ratio as a fee when it really belongs (and is already reflected in) the performance returns. I'm sure plenty of readers can cite a time when a less than scrupulous competitor added fund expense ratios to a skewed fee analysis to show it offered "lower" expenses. They accomplished this trick simply by including funds with lower expense ratios in their proposed line-up while taking a higher – but not quite off-setting – mark-up on their own direct fees.

The "all-in" fee institutionalizes this deception. To be fair, the DOL at one point offered a "Plan Fee Worksheet" that included mutual fund expense ratios and their initial proposal for the Participant Investment Advice Rule included using (only) the fund expense ratio to assess the appropriateness of a fund. The faux pas of treating a fund's expense ratio as a fee was revealed to the DOL and, when they came out with their final Participant Investment Advice Rule a few weeks ago, they specifically noted a fund's expense ratio may be used to assess a fund but it's not the only thing that should be used.

Here's why.

If all we want plan sponsors to do is lower plan expenses, then the easiest way to do that is to go with the lowest expense ratio funds. There are two ways to accomplish this.

First, the plan sponsor can only offer stable value funds (remember, the objective is to lower plan expenses, not 404(c) compliance). Historically, these funds have lower expense ratios than equity funds. This, though, presents a major issue (beyond 404(c), that is). Stable funds offer very poor long-term investment returns. A fiduciary would be in breach of his duty to the client if he placed a client's long-term retirement assets in such funds. Indeed, plans sponsors, service providers and even Congress long ago too many 401(k) investors were investing too much of their assets in stable value funds that it pointedly dealt with this issues in the Pension Protection Act of 2006. Clearly, this is not a practical alternative.

Second, the plan sponsor can only offer index funds, which, historically, are less expensive than actively managed funds. Ignoring the fact index funds often underperformed actively managed funds, the real trouble here, however, is that some 401(k) investors would prefer their investments to be professionally managed – even if that service requires a higher fee. Again, the Pension Protection Act of 2006 specifically addressed this concern through the use of balanced or lifestyle default funds.

It's appropriate we bring up the issue of "all-in" fees during the advent of the month winter begins. The "all-in" methodology provides as much clarity as a raging blizzard. Indeed, if one were to carry it to the extreme, the "all-in" philosophy might just lead to raging 401(k) investors, all with pitchforks and torches, storming the gates of the HR department.