Nationwide can profit from a 401(k) plan through its own funds, revenue sharing, and other fees. Those overlapping revenue streams can create conflicts of interest that plan sponsors should understand. Reviewing where the money flows can help determine whether costs and incentives align with participant interests.
Does Nationwide Have a Conflict of Interest in Your 401(k) Plan?
A conflict of interest can arise whenever the company running your plan also profits from the investments inside it. Nationwide may earn revenue from affiliated funds, revenue sharing, and service fees, so a sponsor should review how those payments affect plan costs and fund selection.
How a 401(k) Provider Like Nationwide Earns Revenue
When a single company handles recordkeeping, administration, and investments for a retirement plan, its revenue can come from several places at once. Nationwide operates as a bundled provider, which means it may collect fees for running the plan and also earn money from the funds offered inside it. That combination is legal and common, yet it can create a conflict of interest that a plan sponsor has a duty to watch.
The concern is not that a provider earns a profit. Every provider does. The real question is whether the fund menu and the level of fees reflect what serves participants or what is most profitable for the provider. When one firm both selects the investments and profits from them, those two goals can pull in different directions.
This diagram illustrates revenue flows in a bundled retirement plan arrangement.
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Four Revenue Streams to Review in Your Plan
Four revenue streams deserve a close look. Each one is disclosed somewhere in your plan paperwork, often in the 408(b)(2) fee disclosure, though the language can be dense. Knowing what to look for makes the money easier to trace.
Affiliated and Proprietary Funds
A bundled provider may steer the investment menu toward its own affiliated funds. These funds carry their own expense ratios, and that revenue stays inside the same corporate family. A diversified, low-cost lineup can still include some affiliated options, but a menu dominated by them is worth questioning.
Revenue Sharing and 12b-1 Fees
Revenue sharing is money that funds pay back to the recordkeeper to be included on the platform. The 12b-1 fee is a marketing and distribution charge baked into a fund’s expenses. Both can quietly offset the stated cost of recordkeeping, which makes a plan look cheaper than it truly is.
Sub-Transfer Agent Payments
Sub-transfer agent payments, often called sub-TA fees, compensate the recordkeeper for tracking participant accounts within a fund. They are legitimate, but they are easy to miss and can vary widely from one fund to another. Comparable services at very different price points are a signal to dig deeper.
Recordkeeper Versus Advisor Roles
This distinction matters most. A recordkeeper administers the plan and is generally not acting as a fiduciary on your investment choices. An independent advisor who accepts fiduciary responsibility is held to a higher standard. Assuming your provider fills both roles can leave a gap in oversight that no one is covering.
Source: fee categories described in standard 408(b)(2) plan disclosures.
What This Means for You as the Plan Sponsor
Understanding a Nationwide 401(k) conflict of interest is not about assuming bad intent. It is about meeting your duty to confirm that fees are reasonable and that fund choices serve participants. As the sponsor, you carry that fiduciary responsibility under the rules that govern workplace retirement plans, and a provider’s profit motive does not transfer that duty away from you.
A practical first step is to benchmark your plan against comparable plans and to read the 408(b)(2) disclosure line by line. Many sponsors discover costs they did not know existed once the revenue sharing and affiliated fund expenses are added together. An independent review of managing investment risk in the lineup, paired with guidance on getting more from a company plan, can surface where incentives and participant interests diverge. A fiduciary review is meant to put participants first, the same discipline behind Preserve. Strengthen. Grow.™
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Frequently Asked Questions
Is Nationwide a Fiduciary for My 401(k) Plan?
Usually it is not the fiduciary for your investment decisions. A recordkeeper like Nationwide typically administers the plan without accepting fiduciary responsibility for the fund menu. That duty often stays with the sponsor unless an independent fiduciary advisor is hired. Confirming who holds each role removes a common blind spot.
What Are Revenue Sharing and 12b-1 Fees?
They are payments that flow from investment funds back toward the plan provider. Revenue sharing helps a fund stay on the platform, and the 12b-1 fee covers marketing and distribution. Both can offset stated recordkeeping costs, which can make a plan appear less expensive than it is.
How Do I Find My Plan’s Hidden Costs?
Start with the 408(b)(2) fee disclosure your provider is required to give you. Read it alongside each fund’s expense ratio and prospectus. Adding the affiliated fund expenses, revenue sharing, and sub-TA payments together reveals the true cost that a single headline number can obscure.
Can I Keep Nationwide and Still Reduce Conflicts?
Yes, in many cases you can. A sponsor can renegotiate pricing, replace high-cost affiliated funds with lower-cost alternatives, and add independent fiduciary oversight without leaving the provider. The goal is reasonable fees and a participant-first menu, which can sometimes be reached without switching platforms.
Does a Self-Directed Brokerage Account Help?
It can, in the right circumstances. A self-directed brokerage account is a plan design feature the sponsor elects to offer, letting certain participants invest beyond the core menu. For high-balance savers, it can provide a path around a fund lineup weighted toward affiliated products.
Who Is Responsible If Plan Fees Are Too High?
The plan sponsor carries that responsibility. Federal rules require fees to be reasonable for the services received, and the duty to monitor them rests with the sponsor, not the provider. Documenting a regular review process is the clearest way to show that duty is being met. You can also read more in our 401(k) Plan Fees & Conflicts guide.
