Lisa Shidler

This may be too obvious, but why wouldn’t an enterprising large scale competitor simply utilize proven Invest-N-Retire technology and preempt Schwab by being first to market with the resources to fully capitalize on the opportunity.

The rationale seems sound, why isn’t there more attentiveness to competitive market position.

We are discovering who the good athletes are and who has been peddling down hill.

SCW

Why the whiff of another delay of Schwab's ETF-only 401(k) plan is drawing so much attention

Walt Bettinger: We expect that's a long-term play.

Schwab

401(k)helpcenter

Invest n Retire

Joel Bruckenstein

Darwin Abrahamson

Rick Meigs

Walter Bettinger

Kevin Chisholm

Todd Shriber

The days when RIAs were the outsiders at the 401(k) party are fast coming to a close. What's new is that the mass of 401(k) assets 
is getting critical at about $3 trillion; fiduciary advisors are getting appreciated; fat fees and questionable kickbacks are getting exposed and stepping out of line is getting dicier as the Department of Labor tightens the regulatory screws.

The old reasons why the 401(k) business is attractive are still in place: there are fresh assets pouring in every month and when employees leave jobs or retire, they produce rollovers that build up IRA accounts for financial advisors. The drawbacks of getting into the 401(k) business are still in place, too. Dealing with retirement assets is really a second line of business and it remains -- unless you overcharge with hidden fees -- a low margin business with high potential fiduciary liabilities.

Still, the outsourcers, infrastructure and accumulated knowledge for RIAs to capitalize on is growing daily and a the mega-shift of assets away from brokers is making the 401(k) business riskier and riskier -- to ignore.

401(k) Stories

A look at the numbers shows that exchange traded funds are starting to move in lockstep with RIAs and vice-versa. RIAs invested $496 billion in ETFs in the 12-month period ended June 30, 2015 – that’s a $78 billion increase compared to the same period the year before. By comparison, the wirehouse channel added 20% fewer ETF assets, or $397 billion in the last year; granted, an amount that was $70 billion greater than its aggregate investment during the same 12-month period the year before, according to Broadridge Financial Solutions. RIAs that manage portfolios and make discretionary investment choices for their clients value ETFs because they provide advisors with easy access to market segments at a cheap price – an especially important factor for RIAs who are compensated on an asset-fee basis. Fee-based advisors appreciate ETFs’ tax efficiency, liquidity and broad exposure at low cost. Conversely, RIAs are a prized channel for ETF-makers like State Street, Invesco, PowerShares, Vanguard Group and BlackRock. ETFs are also a major ingredient in portfolios devised by robo-advisors -- essentially automated RIAs -- for the mass affluent who invest more than 90% of their assets using ETFs.

ETFs

As one snag follows another, the pressure builds on a signature Walt Bettinger effort, but some insiders call Schwab's pace and patience justified, even laudable

Why the whiff of another delay of Schwab's ETF-only 401(k) plan is drawing so much attention

Stephen Winks

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July 30, 2022 at 12:41 AM

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Why the whiff of another delay of Schwab's ETF-only 401(k) plan is drawing so much attention

Stephen Winks

Related Moves

July 30, 2022 at 12:41 AM

December 20, 2021 at 11:59 PM

RIABiz Directory

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