Folio Institutional and unitZXchange partnership makes it easier to use mix of assets in plan accounts
In yet another move to enable the use of ETFs in 401(k) plans, Folio Institutional has teamed with unitZXchange LLC to offer a service that lets advisers use a mix of assets within a customized plan account.
The service creates a single-unit value for model portfolios comprising stocks, mutual funds or exchange-traded funds that are held on the Folio platform, according to Folio Institutional, the custody unit of FOLIOfn Investments Inc.
Unit values make it easier for plan record keepers to handle separate accounts through the normal daily valuation process, Folio officials said.
"Our [adviser] clients tend to build model portfolios, and specifically model portfolios with ETFs," said Alan Smith, vice president of retirement services at Folio Institutional.
"If you look at the record-keeping business, it's been built to handle mutual funds," he said. "When you have model portfolios of ETFs, it gets a little bit tricky."
Folio Institutional's platform is based on a model management system that supports re-balancing and allows commission-free trading of fractional shares or dollar amounts of individual stocks and ETFs.
This makes it possible to fully invest small amounts from plan contributions and allocation changes into ETFs, said Greg Vigrass, president of Folio Institutional.
Folio advisers handle 200 to 300 401(k) plans.
Interest in using ETFs is growing, Mr. Smith said, helped by new fee disclosure requirements coming out this year from the Labor Department.
"Sponsors and advisers are taking a hard look at plans, and in some cases redoing them" in anticipation of the new regulations, he said.
Folio Institutional doesn't disclose assets under custody, but it's in the "multiple billions," Mr. Vigrass said. The firm serves 350 advisory firms.
