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Rating:Apple Moves to Schwab's All-ETF 401k Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, June 07, 2012

Apple Moves to Schwab's All-ETF 401k

News summary by MFWire's editors

Walt Bettinger and Jim McCool are positioning themselves as "disruptive innovators" of the 401(k) space. And if their bet on ETFs takes off it could turn actively managed mutual funds into a niche product in the 401(k) world. Of course, many seemingly great ideas have failed to take hold (Foliofn anyone?), but their work has won the attention of Apple.

Marketwatch carries the news that Apple is switching to an all-ETF retirement plan. The story has also been picked up by Employee Benefit News. The first outlet to report on the news was Bloomberg back in January. Reuters confirmed the move to Schwab.

If other large plan sponsors follow Apple and adopt Schwab's innovation it would be bad news for active mutual fund shops as the 401(k) sales channel is one of the industry's only bright spots for growth since 2008.

The reports say that this move by the largest and arguably most influential U.S. company is a strong endorsement of the utility of ETFs for retirement planning, and may spur other companies to consider following suit.

Despite the rapidly growing ETF market, which now comprises almost 1,470 total products with over $1.13 trillion in total assets, ETFs are not widely used in 401(k) plans. According to data from Cerulli Associates, ETFs account for only 0.2 percent, or around $5 billion, of the total assets of retirement plans at the end of 2010.

But early this year, ETF Trends noted that some plan providers have started including ETFs in 401(k) plans. Not only is Charles Schwab offering an ETF-only 401(k) platform, Capital One's ING Direct and T.D. Ameritrade have begun offering plans that use ETFs. 

Edited by: HFD

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