Exchange traded funds are a natural fit for 401(k) plans. So why aren’t more plan providers incorporating ETFs into their company plan choices? I spoke to Tom Leswing of Ignites and outlined why this is taking longer than expected.  The main reason is the lack of motivation of the providers. 

Another reason is the transaction costs associated with each purchase of ETFs.  A few firms, such as ShareBuilder have developed strategies to cut transaction costs for 401(k) investors who regularly put small sums into their accounts.  They do this by bundling different customer trades.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.