Schwab Introduces Index Fund 401(k) Plans

January 15th, 2012
in econ_news

Econintersect:  Schwab will be offering a new service giving 401(k) plan participants access to index mutual funds with low operating expenses.  Many charles-schwab401(k) plans contain more expensive actively managed funds.  Participants who want knowledgeable, professional advice to get started will have access to a low-cost independent advisory service that develops a savings and investment program with the goal of increasing savings for individuals at retirement.  Thus Schwab is moving from a fund management fee basis for providing the firm income from 401(k) plans toward an asset allocation advisory modelPhoto of Charles Schwab.

Follow up:

From Financial Planning Magazine:

“We know that when people get advice on their 401(k) plans, they save at twice the clip than those who are not getting advice,” Jim McCool, executive vice president and head of Institutional Services at Schwab said in an interview, citing Schwab data. “They are absolutely better diversified, typically across as many as eight asset classes. More than 90% of those participants tend to remain fully invested and allocated even when markets have taken a significant downturn. That is pretty profound.”

In addition to indexed mutual funds the new Schwab plans with include such options as FDIC insured bank accounts, portfolio rebalancing options and index-based ETFs.  The new plans will be available for existing clients as of March 1.  Schwab will also be launching an effort to add new clients.

Source:  Financial Planning Magazine









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