Mutual funds in retirement plans may also be bought at a fractional share to better handle random dollar investments during pre-defined contributions, whereas ETF shares are sold whole.
Dan Egan, director of behavioral finance at the online investment company Betterment, also argued that providers haven’t made the switch to ETFs partly due to commissions from mutual fund companies.
Nevertheless, ETFs have made some inroads into 401(k)s. For instance, Vanguard offers ETFs through its Vanguard Retirement Plan Access. Charles Schwab offers an all-ETF product called Index Advantage. Betterment has the Betterment for Business 401(k) that includes ETF options.
For more information on ETF investing for retirement, visit our retirement category.