Schwab Retirement Plan Services, a Top 10 401(k) provider* to approximately 1.6 million workers saving through company retirement plans, today announced first-year results for Schwab Index Advantage, a one-of-a-kind 401(k) plan offer designed to lower fund investment costs, simplify investing and help workers better prepare for retirement.
“Last year we launched Schwab Index Advantage with the goal of stripping out unnecessary cost and complexity to help workers save more for retirement,” said Steve Anderson, executive vice president of Schwab Retirement Plan Services. “Today, we are seeing the effective implementation of this new breed of 401(k) plan through sharply lower investment expenses and markedly higher rates of advice usage. We believe this is the right combination for success.”
Lower Investment Costs, Higher Advice Usage
Schwab Index Advantage integrates 401(k) features in a unique way to help workers save and invest for retirement. To help drive costs down, Schwab Index Advantage includes index mutual funds with low operating expenses instead of the often more expensive actively-managed mutual funds found in many 401(k) plans. Focusing on simplicity, the program includes a professional, low-cost, independent advice service that develops an ongoing personalized savings and investment strategy for individuals.Workers enrolled in Schwab Index Advantage have seen the weighted average operating expense ratio (OER) for investments in their 401(k) plans fall 77 percent to $14.78 per $10,000 invested because the plans now use index mutual funds. Prior to transitioning to Schwab Index Advantage, the weighted average OER for these same plans was $65.11 per $10,000 invested.** “Investment costs are significantly lower in these plans, which can positively impact the amount individuals can accumulate during their career,” Anderson said.
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