Retirement plan fees are coming under the microscope in light of the Department of Labor's newly adopted, yet controversial, Retirement Security Rule, which seeks to define who is an investment advice fiduciary for the purposes of ERISA.

The final rule provides that a financial services provider will be an investment advice fiduciary under federal pension law "if the provider makes an investment recommendation to a retirement investor; the recommendation is provided for a fee or other compensation, such as commissions; and the financial services provider holds itself out as a trusted adviser by specifically stating that it is acting as a fiduciary under … ERISA; or making the recommendation in a way that would indicate to a reasonable investor that it is acting as a trusted adviser making individualized recommendations based on the investor's best interest."

A recent study from Employee Fiduciary, a 401(k) recordkeeper and third-party administrator, set out to determine whether fiduciary-grade investment advice can lower the cost of small business 401(k) plans. Conclusion: Fiduciary-grade advice is crucial for reducing costs and enhancing retirement outcomes because advisors who follow fiduciary standards recommend investments with reasonable fees, leading to additional savings through reduced investment expenses and an increased opportunity for compounding.