The new platform is now available to plan sponsors and independent advisers to incorporate a range of 401(k) investment vehicles, including index-tracking ETFs, index mutual funds, and actively managed mutual funds.
According to a BenefitStreet press release, traditional 401(k) recordkeeping systems were designed to allow incremental investments in mutual funds and other products that do not trade in whole shares on an Exchange. BenefitStreet’s introduction of its ETF-only 401(k) platform addressed this technology issue to enable direct, incremental investments in ETFs (See BenefitStreet Offers iShares ETFs Directly to Plan Sponsors ).
The platform aggregates ETF orders across all plan sponsors and places trades at the fund level to reduce trading costs at the participant level to a fraction of a penny, the announcement said.
However, some plan sponsors have been reluctant to take away the mutual fund choices that participants are familiar with and BenefitStreet’s new offering addresses this concern, according to the company
“The new platform removes the roadblocks that kept 401(k) participants from having access to ETFs,” said Jim Drury, CEO of BenefitStreet, in the press release. “Participants in 401(k) plans should have every investment opportunity open to them, and we believe it is the fiduciary responsibility of plan sponsors to ensure that choice.”