Schwab’s foray into providing ETF access in 401(k) plans puts the firm in competition with a familiar rival. TD Ameritrade (NasdaqGM: AMTD) is already offering ETFs to the 401(k) world and has been doing so for nearly three years. [Ameritrade Solves 401(k) ETF Riddle]

Brokerage firms looking to offer ETFs in 401(k) plans have previously faced some stumbling blocks, including technological challenges, such as the fact that most 401(k) platforms were designed to trade only at the end of the day, a la mutual funds.

Other issues include the oft-discussed topic of fractional shares, a concern because ETFs – unlike mutual funds — generally can only be bought and sold in whole shares.

“Despite the obvious benefits of exchange-traded funds, mutual fund companies that dominate the 401(k) industry have largely ignored them – simply because these companies lack either the capabilities or the will to effectively accommodate exchange-traded funds in the retirement plans they offer. Others in the industry suggest that offering exchange-traded funds to 401(k) participants will lead to over-active trading, an argument not supported by the facts.We heard the same false argument 25 years ago when the industry began updating participant 401(k) balances on a daily basis, instead of quarterly,” Anderson noted. “We believe in challenging the status quo and investing our resources to help drive positive change and contribute to better outcomes for hard-working Americans.”

Then there is the notion that many U.S. works have access to index mutual funds in their 401(k) plans, some with fees below 0.1% per year, so there is not a need to offer low-cost ETFs to workers.

Obviously, that argument is flawed because “many” does not mean a majority and it certainly does not mean “all.” As an editorial aside, I will point out that I’ve helped my wife select funds for her 401(k) at two different jobs in the time we have known each other. The plans she has been subjected to did not have 80 funds to pick from, but they had plenty of mutual funds with fees in excess of 90 basis points per year. I’m pretty sure she would have enjoyed increased choice with lower fees. Who wouldn’t?