WisdomTree Sees 401(k) Plans, Fee-Based Advisors Driving ETFs | ETF Trends

Exchange traded fund manager and public company WisdomTree (NasdaqGM: WETF) says it expects 401(k) plans and fee-based financial advisors to continue to adopt ETFs and drive the next round of growth in the business.

WisdomTree recently announced a higher third-quarter profit as the asset manager sees money flow into its ETFs. [WisdomTree Quarterly Profit More than Triples]

During the firm’s earnings conference call, Chief Executive Jonathan Steinberg said 401(k) retirement plans are becoming transparent on the fees they charge participants. New federal disclosure rules went into effect this summer that help 401(k) investors figure out exactly how much they’re paying in costs.

“So, for the first time ever when you got your statement, you actually had some fee disclosure. That should prove to be a very constructive catalyst for future ETF adoption within 401(k) plans,” the WisdomTree CEO said.

There is over $3 trillion in U.S. 401(k) retirement plans, but only 0.2% of the assets are in ETF products, according to a recent report. However, with new fee disclosure rules, analysts think investors could start to look for low-cost, index-based ETF options to replace expensive mutual funds. [Five Key Trends in the ETF Landscape]

In the 401(k) industry, administration and back-office functions are geared to mutual funds. However, the ETF business has been developing platforms that would allow plans to use ETFs more. [New 401(k) Fee Disclosure Rules Would Give Low-Cost ETFs an Edge]

ETFs can be bought and sold during the day. The way they’re traded has been an obstacle for 401(k) plan inclusion. [ETFs Have Room for Growth in Retirement Plans]