"We believe workers can and should get more value from their 401(k)s," said Steve Anderson, head of Schwab Retirement Plan Services. "In 2012, we successfully launched Schwab Index Advantage, designed to help workers better prepare for retirement using low-cost index mutual funds and personalized advice. We are now launching an additional version of Schwab Index Advantage with the goal of further driving down investment costs by using low-cost exchange-traded funds."

Schwab expects the first users of the platform to be onboard by the end of 2014. Anderson said he believes 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 funds, and by more than 30 percent compared to 401(k) plans that use index mutual funds.

The company touted that it is the first major firm to offer this type of full-service ETF-based 401(k).

Others in the industry disagree, highlighting others who have been offering ETF options within 401(k) plans for three years or more. Instead of offering prepackaged ETF-based 401(k) plans, they instead offer advisors and plan sponsors the ability to pick and choose which types of investment choices they want to offer within their plans.

Skip Schweiss, president of TD Ameritrade Trust Company and head of TD Ameritrade Institutional's retirement plan business, pointed out that there are recordkeeping firms and platforms beginning to offer access to ETFs through 401(k)s and said that his company has offered that option since 2011.

The TD Ameritrade offering differs from Schwab in many ways, including that "we believe advisors and plan sponsors should pick the best investments for the plan and participants. We make a universe of investments available to plans: ETFs, brokerage windows, company stock, you can have it all in your plan custody."

He added that he likes that TD offers options and doesn't believe a 401(k) should offer just one type of investment, like ETFs. "We like the word 'and' better than the word 'or,'" Schweiss said.

That said, Schweiss is "in favor of anything that will help people save for retirement. We all know we are heading into a retirement crisis in America. The number one thing people need to do is participate in a plan and contribute as much as possible."

The second is to control costs and, in this instance, ETFs can be a "valuable tool," he said.

Vern Sumnicht, CEO of iSectors LLC, an ETF-based investment manager in Appleton, Wis., said that his firm worked with Mid Atlantic Trust Company, a custody and management program, to set up ETF-based portfolios a few years ago.

"They are a little behind. They are certainly not the first," he said. "Nonetheless it is good that they are trying to lower costs for plan participants. I'm 100 percent on board for that concept. That's why we do it. We create asset allocation models with ETFs. We spent a long time developing contracts and stuff, working with ERISA attorneys and Mid Atlantic to develop a simple turnkey program for advisors to use with their 401(k) plan clients."

Sumnicht added that he began working with ETFs because he felt it was "important to crack this fee problem. There's a serious fee problem in most 401(k) plans and oftentimes those fees are paid by the employees, not by the employers, and so the employers are the ones selecting everything, but it ends up being the employees that pay the costs of those selections."

Under the new Schwab platform, workers would pay an average of $60 per $10,000 invested for fund investment costs and professional management, compared to the typical $95 to $140 per $10,000 invested in other 401(k) plans.

"Our approach delivers personalized advice at a total cost lower than many plans without any advice included," Anderson said. "It is a compelling value that can have a real, long-term impact on retirement savings."

Independent third-party advisory services will be provided by GuidedChoice Asset Management, Inc., or Morningstar Associates LLC.

The Schwab platform will fully integrate ETFs as core investments within a 401(k) plan, including commission-free trading, the ability to process partial shares along with 25 asset categories from 11 different providers.

Both Sumnicht and Schweiss said they were concerned that Schwab's ETF offerings included the company's own proprietary exchange-traded funds.

"It's one thing to say, 'we're going to do this, we did research on ETFs,' and another thing to say, 'a lot of them are ours, our own that are being offered,'" Sumnicht said. "It would be worse if they didn't say it. At least they are disclosing it."

He added that he doesn't believe all of the funds Schwab is including are in fact ETFs. He believes the commodity funds are ETNs, which have a bit more risk associated with them because they have a bank as a third party.

"ETFs are a good way to access asset classes in a low cost manner, but mutual funds shouldn't be left out," Schweiss said. "Many index funds have very low costs, especially institutional share classes. Many advisors don't understand the ETF motivation when they can get the same asset class returns with mutual funds, with a lower cost even. ETFs have their place to capture asset returns at a low cost, but I think those decisions need to be made case-by-case. I'm not going to say ETFs are categorically cheaper than mutual funds because that is not the case."

TD Ameritrade has its niche and "it is working for us. It doesn't involve proprietary investment products," he added.