Is there a chance that ETFs might break into the 401(k) business? CNBC columnist Neil Plein says the existing resistence, based on low returns for advisors and institutions, might change with a new payment system.
Plein, of Invest in Retire, says there's been little progress in the past because of the difficulty of handling fractional share purchases — and that advisors believe they'd make less money using ETFs.
Plein points to a new system pioneered by Darwin Abrahamson which splits the 401(k)s' basis points more evenly: While the average 401(k) charges about 150 basis points, Abrahamson did a presentation at the IndexUniverse Inside ETF conference where he said he could do ETF model portfolios at an average cost of 70 basis points.
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