401(k) Specialist Issue 2 - 2016 - 15

THE FIDUCIARY FILE
until the 1980s, which is when 401(k)s came
along. It wasn't intentional; it's just how it
happened. "
Noting that " a lot of people " said the
benefits of ETFs are not right for the 401(k)
structure, advisors nevertheless started
asking for them " a few years ago. "
" They can use them in brokerage
accounts and managed portfolios, and
they're included on core menus, " he adds.
" Our advisors will offer 10 or 20 ETFs on an
investment menu, rather than comparable
active or index mutual funds. Yes, there are
settlement issues, timing differences and
other technology and operational issues to
overcome, but we roll up trades at end-ofday
and bundle them for better pricing. "
Overall, he claims there is a 1 percent to 2
What's Next for ETF
Adoption in 401(k)s? TDAI's
Skip Schweiss Sounds Off
RETIREMENT-PLAN RENAISSANCE MAN SKIP SCHWEISS wears multiple hats at TD Ameritrade
Institutional. He's managing director of advisor advocacy and industry affairs for the
firm, and therefore steeped in the fiduciary issue, but also serves as head of TD Ameritrade
Institutional's retirement plan services.
The latter means he can sound off authoritatively on the use of exchange-traded funds
in 401(k) plans, a major theme of this month's issue. While we know it's not directly fiduciary-related,
we have nowhere else to put him, and really want to hear what he has to say. So
here he is.
" The 401(k) industry and mutual funds industries grew up together, " Schweiss says, when
asked about mutual fund use by plan participants to the exclusion of other products. " Yes,
mutual funds have been around for about 90 years, but they didn't experience real adoption
percent ETF adoption rate in 401(k)s industry-wide,
so it's still very low, which means
" we don't have an overriding goal to have 'X'
percent of our business using ETFs in 401(k)
s. Rather, we're agnostic and simply service
our clients. "
As for how they are used, Schweiss notes
they complement, rather than compete
with, their mutual funds counterparts.
" When a plan uses ETFs, they are not
using them exclusively, but rather blending
them with mutual funds. Vanguard is really
the dominant player on our platform right
now. We're just really happy to meet the
need for greater adoption and plan use. "
He concludes with sober thoughts surrounding
the excitement of ETF asset growth.
" ETFs, combined, currently hold $1 trillion
in assets while mutual funds hold $15
trillion in assets. So I'm a bit cautious about
this idea that they'll take over the world,
but they are growing. "
In Their Own Words
" WE WILL MOVE FORWARD towards issuing a Final Rule that balances the input
we have received ...The [DOL] has undertaken incredibly thorough public outreach
over the past five years as we have designed this proposal. When I became Labor
Secretary two years ago, I committed to slowing down the process to ensure that all
voices could be heard. " - Department of Labor (DOL) Secretary Thomas Perez written
in response to a letter from Rep. Ann Wagner, R-Missouri. Wagner's letter included signatures
from representatives of both political parties, and warned that the fiduciary
proposal could limit access to quality financial advice for the middle class.
ISSUE 2 2015 | 401kSpecialistmag.com 15

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401(k) Specialist Issue 2 - 2016

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