Many HR departments received requests for a broader range of investment choices, reflecting an array of asset classes and sector funds. So the new brokerage feature appealed to those who wanted total control of their investments in the 401(k) plan.

Accordingly, the windows have proven to be popular with some employees for the freedom of choice presented.

However, overall usage is typically limited, with participants tending to be more senior-level, older and/or higher paid. Only 4 percent of workers with access to the brokerage option use it (8.3 percent of those earning over $100,000 do).

Why brokerage options aren't a top priority

Businesses develop their benefit plans to be competitive both within their geographic area and their industry.

These days, a retirement savings plan is a must for medium to larger firms in nearly all arenas, and for smaller businesses in some industries. However, when job candidates weigh benefits packages, a brokerage window is not a selling point.

People are far more concerned about a company match, vesting schedules, that there be varied fund choices and wait periods for participation.

Given the low usage, having a brokerage account option is not a variable for attracting or keeping good employees. If someone has a large rollover balance from a previous employer, they can easily invest it with a brokerage account on their own.

Brokerage window funds typically have higher fees.

Many recordkeeping service providers charge additional fees for the service (typically at the participant level). Additionally, indications are that returns in brokerage accounts are most likely not higher. The S&P 500 stock index outperformed 79 percent of large-cap fund managers in 2011.

Also, research shows that defined benefit plans outperform defined contribution plans. From 1995 to 2011, the difference averaged 76 basis points.

An additional concern with having a self-directed option or even a vast assortment of funds in a 401(k) is employee confusion over having too much choice. A 2016 Wharton study showed that having too many funds from which to choose confuses participants.

Additionally, those plans that have reduced their fund menu have found that participants choose lower fee funds and make fewer trades than before. They reportedly save over $9,400 over a 20-year period.

Cost considerations and the regulatory environment

In recent years, fees have been a contentious issue for 401(k) plans and other investment options.

This has included several lawsuits, including one that reached the U.S. Supreme Court two years ago. The Supreme Court ruling in Tibble V. Edison (2015) determined that Edison International acted imprudently by offering six retail-class mutual funds in their 401(k) when materially identical institutional-class funds with lower fees were available.

The plan had approximately 50 funds available, including more than 40 with lower fees, but having some that weren't the lowest breached the company's fiduciary responsibility.

For many plan sponsors, the quarterly review of the standard investment menu is tricky. What does the plan sponsor do if they see a huge gain or loss? If they start the review of the returns in a window, they could open Pandora's box.

Additionally, does offering brand-name funds through a window create a problem if institution-class versions are available?

Besides the lawsuits, the fee issue resulted in an Obama administration Department of Labor (DOL) ruling on the fiduciary responsibility of investment advisors and plan sponsors acting on employees' behalves introduced.

While the DOL ruling implementation has been delayed by the current administration, many sponsors and record keepers had reviewed their agreements and plan designs to minimize risks based on funds offered, particularly with regard to fee disclosure requirements.

Plan sponsors (employers) are always at risk from a complaint/lawsuit related to the investment menu, with or without brokerage accounts.

One can argue that requiring a participant to sign an extra form before they select the brokerage account indicating they are 100 percent responsible for their investments might help.