...AND RICHER...:

 The Department of Labor's fiduciary rule, which takes effect in April, requires advisers for retirement investments to put a client's interest before their own. A 2015 government report estimated that adviser conflicts of interest cost investors some $17 billion a year. The rule could be a regulatory catalyst for growth, said Tyler Cloherty, senior manager with Casey Quirk by Deloitte.

"There will be more impediments to moving small-balance accounts to advisers, so more money will likely stay within the 401(k)," he said, rather than be rolled into an IRA, for example, with the plan's outside administrator. 1

Why would a company choose a 401(k) upstart over the long-established pros? Among the reasons ticked off by Cynthia Loh, general manager for the product, are lower fees; managed, personalized portfolios for all participants; no conflicts of interest in fund selection; and a modern, intuitive user interface. Betterment 401(k) accounts also can use a new algorithmic service the company launched in September that aims to improve a portfolio's tax efficiency, which adds to returns over time.

"The opportunity is that innovation has to happen, and the 401(k) space is not blessed with innovation," said Alois Pirker, research director for Aite Group. "It has been a shielded kind of space."

Others have made inroads with online 401(k) advisory services, although they don't tend to have a soup-to-nuts operation that stretches from record-keeping to asset management as Betterment does. Financial Engines, a well-established online advisory service that acts as a fiduciary for 401(k) plans, works with about 700 companies that employ a total of 10 million workers. It offers basic portfolio advice for all accounts and more personalized advice for an additional fee. Morningstar is also a player in the managed account advisory business for 401(k) plans.

Betterment's 401(k) offering operates much like its regular advisory service. It creates portfolios of exchange-traded funds based on your age and answers to a risk questionnaire, and it rebalances portfolios to your planned asset allocation regularly. It charges an asset-based fee ranging from 0.1 to 0.6 percentage points, depending on plan size. The ETF fees are typically 0.1 to 0.12 percentage points in the tax-deferred accounts.

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