May 14

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Fulcrum Inquiry beat Apple’s 401(k) innovation

In a Bloomberg audio report regarding the use of exchange traded funds (ETFs) in 401(k) plans, Apple was identified as having an all ETF 401(k) plan. This shows Apple’s innovation in ways outside of their products, as there are challenges in using ETFs with the recordkeeping platforms that most plans use. Because of the resistance to change these record keeping platforms, very few 401(k) s offer ETFs. Apple is almost certainly the largest 401k plan to have invested in this manner.

There is around $13 trillion invested in 401(k) plans. Mutual funds comprise the vast majority of these investments. According to Bloomberg, only about 1% of ETFs are currently in 401(k) plans. ETF assets could grow enormously if 401(k) s adopted ETFs in a meaningful manner.

401k plans have been notorious for having high costs. A recent successful lawsuit on this subject is described here.

My firm is delighted to have beaten Apple to the punch. We have had an all-ETF plan for ten years. Doing this required internally developing our own recordkeeping platform, but the lower costs for our plan participants are well worth the extra work.


About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

Permanent link to this article: http://betweenthenumbers.net/2012/05/fulcrum-inquiry-beat-apples-401k-innovation/

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