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Portfolio > Alternative Investments > Hedge Funds

Nationwide Opens 401(k) Plan Window To Fund Universe

By Marcella De Simone

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NU Online News Service, Aug. 4, 2003, 6:15 p.m. EDT – Nationwide Financial Services Inc., Columbus, Ohio, is trying to make 401(k) plan flexibility a little cheaper.

The company is setting up a vehicle called a “fund window” for plan participants who want to invest in funds outside their plans without paying high fees.

Most other plan providers that let participants invest in outside plans require participants to set up special accounts to do so, Nationwide says. The fees for those accounts can be relatively high.

By opening a fund window, Nationwide is giving plan sponsors the ability to offer participants the ability to use their regular 401(k) accounts to invest in outside funds without paying extra fees, the company says.

The typical plan menu lists fewer than two dozen funds. Adding the fund window will give Nationwide plan participants access to more than 600 funds, Nationwide says.

Nationwide reports all of the investments on a single statement and gives employees access to the investments through a single Web site.

Of course, some human resources executives who remember the daytrading craze might fear that a fund window will tempt cocky market timers to leap to their financial doom.

Nationwide tries to make sure that the plan participants who use the window know what they are doing, says Michael Butler, senior vice president of retirement plan sales at NFS Distributors Inc., Nationwide Financial’s distribution arm.

“To get access to this fund window, the plan sponsor has to agree it’s appropriate for their plan,” Butler says. “[The investors] have to go through a waiver letting them know they are going beyond the core investments.”

Nationwide also tries to emphasize “smart asset allocation.”

“We provide tools for proper allocation so [participants] don’t get too over-weighted in one structure,” Butler says.

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