Link’s passive investing, robo-advisor and use of ETFs benefits both employers and employees

Exchange Traded Funds (ETFs), the relatively new kids on the investment block, surpassed $4 trillion in total North American holdings by the end of 2019.

That’s nearly 20% of funds held by investors, a portion that continues to climb. For good reason—or, as some might say, good reasons.

Simplicity. Low cost. Liquidity. Low cost. Transparency. Did we mention low cost?

“We stress for plan sponsors and individuals that ETFs are accessible, flexible and low-cost,” says one benefits provider.

“One positive trend we’ve seen is a strong competition in the (retirement plan) space that drives fees down, and the lower the fees, the greater the retirement benefit for participants. ETFs by nature have very low fees, and there will be continued movement of money from high-fee mutual funds,” says another.

“Plan fiduciaries have a duty to make sure fees are reasonable, and that means looking at a variety of vehicles.”

So, is there a place for ETFs in retirement plans? Absolutely.

In fact, ETFs align remarkably well with Link Investment Management’s stance as a disruptive innovator in the world of workplace financial wellness.

Link’s retirement and savings solutions, including our defined-contribution LINK Multi Employer Pension Plan, combine ETFs with a passive investing model and Link’s own proprietary robo-advisor algorithm to help people spend less, invest more and retire comfortably.

“Beating the market, which is the goal of actively managed funds, is a gamble. We choose not to gamble,” says Brian McClennon, President and CEO of Link. “Why should it matter to you? The bottom line. With a passive investing model using ETFs, you’re harnessing the power of funds that consistently outperform actively managed funds—and you’re enjoying their lower costs, too.”

For small to midsize employers seeking a workforce savings plan that works for both the business and its employers, the advantages of a Link plan include:

  • Reduced strain on a company’s internal resources, with Link responsible for design, investment strategy, implementation, monitoring, disclosure, communication and service provider selection and oversight
  • Tailor-made investment portfolios that reflect an employee’s retirement objectives, risk tolerance and timeline
  • Regular, automated rebalancing based on a member’s assigned asset allocation
  • A lower and completely transparent fee schedule

“Link’s investment strategy—matching market performance, rather than trying to beat it—reduces risk, eliminates emotion and improves retirement outcomes,” notes Mr. McClennon.