John Hancock is changing the pricing on its 401(k) plans to help sponsors address issues of fairness in allocating plan expenses across all participants, the company announced Wednesday.
The changes follow a model set forth in 2013 with the JH Enterprise platform, which features technology that allows revenue sharing between all participants in a mutual-fund-based retirement plan. The Enterprise platform serves plans with between $10 million and $100 million.
"One of the features of that new platform is that we ensure that no matter which fund you chose, whatever revenue sharing there was, that revenue sharing was accounted, accrued and credited back to that individual participant," Peter Gordon, president of retirement plan services for John Hancock, told ThinkAdvisor on Thursday. "That's pretty contrary to the industry, which by and large uses an ERISA account, where all those credits would normally flow back to the plan level and then be distributed on some sort of allocation basis, so effectively there's a fair amount of cross-subsidization going on."
Advisors and plan sponsors have been "extremely excited" about that feature, Gordon said. Following that response, John Hancock is applying that concept to its core platform, which is being relaunched as Signature 2.0, he said. "We took that exact same concept, did it in a slightly different way, but it has the same result so there is zero cross-subsidization between funds with different types of revenue sharing."
