Key Takeaways

• Hidden fees are common in small retirement plans, especially when advisors are paid through commissions rather than direct billing.
• Lack of transparency is a significant issue, as most owners never receive invoices that clearly show the actual cost of their plans.
• Participants (often the owners) pay the majority of fees, and those fees reduce investment growth over time.
• Paying fees at the employer level increases transparency and allows them to become tax-deductible business expenses.
• The most valuable advisors are those who provide true service, such as one-on-one participant support, rather than just investment selections.

In a recent episode of Beyond Bitewings, we explored a topic dental practice owners need to be thinking about: the inner workings of their 401(k) and retirement plans. Guest Paul Sippil, a forensic 401(k) consultant, joined us to discuss how excessive fees, conflicts of interest, and a lack of transparency can quietly drain retirement savings for both owners and employees. His work focuses on uncovering hidden costs, exposing problematic plan structures, and helping businesses make informed decisions about their retirement benefits.

Sippil’s journey into this niche field began when he discovered that retirement-plan filings are publicly accessible. Curious, he started reviewing them and noticed a disturbing pattern: plans charging far more in fees than participants realized, especially in small businesses where owners often assume they “aren’t paying anything.” Over time, he found that excessive commissions, outdated compensation arrangements, and even advisor neglect were far more common than most people imagine.

One striking example involved a business that had been unknowingly paying nearly $10,000 a year in commissions to an advisor who had passed away more than a decade earlier. With no invoices sent and costs hidden inside investment funds, the employer never saw the fees leaving the plan. “Just because you don’t see something doesn’t mean it isn’t real,” Sipple noted, emphasizing how buried fee structures allow problems to go unnoticed for years.

Much of the issue, he explained, comes down to how compensation is structured. In many smaller plans, brokers are paid a percentage of total plan assets regardless of how much work they perform. When fees are taken directly from participant accounts with no bills sent to the employer, plan sponsors rarely have an incentive to scrutinize costs or demand more meaningful service. As a result, participants, often the owners themselves, end up footing the largest share of the bill without realizing it.

Sippil shared that simply shifting fees so the employer receives an invoice that he or she pays directly can dramatically improve transparency and reduce long-term costs. When owners see what they’re paying, they naturally push for fair pricing and higher-value support, often saving thousands of dollars and allowing participant balances to grow more efficiently over time.

For dental practices, where owners may hold the majority of retirement-plan assets, this change can be especially impactful. Paying fees at the employer level also makes them tax-deductible, unlike the embedded charges that quietly reduce participant balances.

Above all, Sippil emphasized the importance of selecting advisors who offer genuine guidance, not just fund recommendations. The real value, he said, comes from one-on-one time with participants, helping them understand contributions, Roth vs. traditional options, and long-term retirement strategy. Without these services, “You’re paying an advisor who isn’t doing anything,” he said.

His message was clear: most practice owners don’t realize how their plans work behind the scenes, but a little awareness can prevent unnecessary expenses, strengthen employee benefits, and protect their own retirement savings.