Brightscape Launches ETF 401k Programs
MIAMI, FL, December 20, 2005 -- Brightscape Investment Centers, Inc., ( http://www.brightscape.com ), a nationwide network of independent investment professionals, announced today an exciting innovation in its 401k offering that will be a tremendous benefit to plan participants. Brightscape's CEO, Eric Weiss, stated: "Using Exchange Traded Funds (ETFs) in 401k plans allows participants to keep more of their hard-earned money, putting them on a path to a more secure retirement."
The use of ETFs has grown rapidly in non-retirement or taxable accounts because of their low cost and excellent diversification attributes. Until now, they have not been used in 401k plans because of prohibitively high trading costs. However, Weiss states: "Through our partnership with BenefitStreet ( http://www.benefitstreet.com ) and AST Trust Co. ( http://www.asttrustco.com ), we have found a method of utilizing ETFs in 401k plans without high trading costs."
A 2003 Small Business Retirement Survey states that upwards of 71% of full-time small business employees are not covered by any retirement plan, leaving 50 million people without benefits. According to Taylor Gang, EVP, "Unlike other providers who require minimum plan sizes, the Brightscape program is available to businesses of all sizes, including start-up plans. Through our program, we are bringing the most innovative features of the 401k market to small businesses, enabling their employees to keep more of the money they contribute to their retirement plan."
Using ETFs can also help employers comply with their fiduciary requirements under ERISA. According to the Department of Labor (DOL), employers must: "ensure that fees paid to service providers ... are reasonable in light of the level and quality of services provided." Many mutual funds contain a fee known as the "12(b)-1", which is used to help pay for advertising and distribution costs. According to Weiss, "Mutual funds that are part of a 401k plan, however, do not need to be advertised nor distributed since they are being sold to a captive audience. Therefore, imposing such costs on 401k participants seems contrary to the DOL directive on fees. Since ETFs have no 12(b)-1 fee, they are more in line with DOL guidelines."
About Brightscape
Brightscape Investment Centers, Inc. is a Miami-based nationwide network of investment professionals who provide independent and objective advice to individuals and companies. For further information, please contact Taylor M. Gang at (305) 670-4880.
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