Some companies are already meeting that demand. TD Ameritrade (NasdaqGM: AMTD) is already offering ETFs to the 401(k) world and has been doing so for nearly three years. [TD Ameritrade Solves ETF/401(k) Riddle]
Earlier this year, Schwab Retirement Plans Services made 80 ETFs from 11 providers available in its new 401(k) ETF platform. In addition to Schwab ETFs, plan participants can choose from ETFs offered by ETF Securities, First Trust, Guggenheim Investments, Invesco PowerShares, iShares ETFs, PIMCO, State Street Global Advisors, Van Eck Global, Vanguard and United States Commodity Funds. [Schwab Launches 401(k) ETF Program]
A 401(k) plan using index exchange-traded funds can reduce investment expenses by more than 90 percent compared to a typical 401(k) plan that primarily uses actively managed mutual funds, and by more than 30 percent compared to a 401(k) plan that uses index mutual funds, said Steve Anderson, head of Schwab Retirement Plan Services, when Schwab unveiled its plans to bring ETFs to 401(k) plans.
“The combination of technological advancements and individual demands has positioned investors to migrate away from the traditional 401(k) plan towards an option that is better suited for the modern investment environment,” added Rolph in the Employee Benefit News article.
ETF Trends editorial team contributed to this post.