We ended our last column with you on the telephone, listening to vendors explain what they do and how they get paid. You were taking thorough notes. Remember I said "Do not agree to meetings?" I meant it. Have them send you a proposal and any collateral information they want to offer. Also request a suggested fund line-up broken down by category, e.g., Short-term Bond, International, Small Cap Growth. Not all vendors will do this, arguing this could be construed as investment advice and, therefore, potentially, a fiduciary function. Tell them you understand and, then, say, "I actually am asking only for 'funds to consider' that you think properly represent your offerings." It may work but if not, don't worry because, regardless of whether they will or will not give you a "consideration list" you want their full fund line-up with full information on fund expenses and fees as well. Additionally, you want a list of all services and all fees for service, "wrap-around" charges, anything that does or could impact the plan or you clearly explained. Once you have this information, it's time to start comparing. A spreadsheet program's all you need.

Now, let me turn aside, briefly, to say most vendors don't like spreadsheets. They argue, with some merit, that "spreadsheeting" doesn't capture the "value adds" of their program, all the wonderful things they offer and do that can't be quantified. I agree. Spreadsheets serve a specific and limited, although very important, purpose: To reduce numbers to, well, numbers for close comparison. If you've done your interviewing thoroughly, you will have a sense of each provider, what they offer, how they work; you will have seen their best foot forward in the proposal and collateral materials you had them send to you. You will have discussed the range of services they offer and how the team they'll assign to you will operate. In other words, you'll have an idea of whom and what they are. You may, from that research, already have begun to rank and rate, maybe even eliminate a few. Good. You're now at the point where "spreadsheeting's" critical: You're ready to determine value.

I use three categories of expenses: Recordkeeping and Administration, Trustee and Custodial, Investment. Under Recordkeeping and Administration I look at fees for documents, updates, base recordkeeping and/or administration fees, per head charges, asset based charges, fees for loans, withdrawals, distributions, preparation of filings, transaction or transfer charges. Sometimes there are fees for statements or to have statements mailed to participant homes. If it feels like you're nit-picking, well, in a sense you're being preventive; those nits can get to you!

Trustee and Custodial charges sometimes overlap with the other categories but I try to break them out as asset-based or fees-for-services. Usually "trustee" means "directed trustee" and is a simple dollar amount. Custodial fees, on the other hand, are often a percentage of assets in the plan, e.g., 0.005%. You want to watch for "separate account" or "self-directed brokerage" account charges.

Check for charges for "funds in excess," of a certain number or for "outside funds." Many providers claim to offer "open architecture," implying you can have any fund you want, when in reality the openness comes, if at all, at significant cost. Brandishing the "all funds offered" list I've told you to have providers send, ask "What happens to my costs if I want a fund not on this list?" The answer may surprise you.

Next: "Uncovering Investment Fees."