Invest n Retire, a recordkeeper based in Portland, Ore., that specializes in offering ETFs to defined-contribution plans, recently released a white paper calling for a “revolution in the retirement industry, the core of which is an entirely new structure designed around exclusively offering exchange-traded funds as investment options.”

Neil Plein, vice president of sales and marketing for Invest n Retire and author of the paper, calls this strategy the “only truly viable way to enact the type of technological change participants urgently need to build higher average retirement balances on a macro scale.”

Mutual fund proponents may claim that low-cost index mutual funds can do the job of ETFs in a retirement plan, Plein writes. He argues, however, that since an ETF and an index mutual fund can track the same index, a lower cost ETF is the better investment. Mutual funds, he writes, have inherent costs like “brokerage commissions, ‘market impact costs’ and spreads” that ETFs don’t have.

Plein points to a 2007 John Hancock study that found a majority of surveyed retirement plan participants would have fared better in a lifestyle portfolio than they did picking their own investments. A June 2011 study from Vanguard found that more retirement plan participants were using professionally managed automatic investment programs. A September 2011 report form Aon Hewitt and Financial Engines found that investors who use professional management tend to have higher average portfolio balances, according to Plein.

While target-date funds are beneficial, Plein says, ETF models are still superior due to their lower cost and because they provide “an essential element of clarity” that TDFs lack. “This element of clarity highlights a significant difference between target-date funds and model portfolios,” Plein writes. “With model portfolios, the historical investment gain or loss for each ETF can be used in order to calculate the [historical] investment return (rate of return) for the model, which helps participants make well-informed decisions.”

Education is too standardized to be efficient, according to Plein. “Each person learns differently and in different ways, so the method of tomorrow’s education should be designed with this in mind, rather than how the system standardizes the delivery of information to plan participants.” That system will involve investors who are already engaged in their retirement plan (admittedly a minority, Plein acknowledges) in a way that provides “exact answers to the exact questions they have.”

Plein suggests short videos are the answer to the education question. “Presenting simplified areas of focus, complimented by an educational opportunity that accommodates unique learning styles and unique questions, offers an effective and efficient way to fill any gap in understanding that would prevent someone from having clarity on what their retirement goals are and whether or not they’re on track to reach them,” he writes.