Despite their recent growth, exchange-traded funds still struggle to crack the stranglehold mutual funds have on the retirement market. Best estimates currently place ETFs at less than 5% of all assets in 401(k) plans.

But that may be changing. Several new ETF-friendly plan providers and record-keepers have emerged in recent years, and ETF titan iShares recently announced a new program to simplify the use of these instruments for retirement plans.

“ETFs can solve a huge problem in 401(k) plans by lowering fees,” says Darwin Abrahamson, CEO of Invest n Retire LLC, an ETF-friendly 401(k) recordkeeping service in Portland, Oregon.

The technical challenges that once prevented ETFs from being used in 401(k) plans have largely been resolved, says Abrahamson.

Historically, most 401(k) recordkeeping and accounting systems were designed to accommodate mutual funds, which trade once daily at the end of the day, and can always be bought and sold in fractional shares.

ETFs, however, may only be purchased as whole shares, like a stock. And since most 401(k) investors automatically fund their accounts through payroll deduction, their contributions rarely equal the exact cost of a certain number of ETF shares. Further, placing 12 or 26 or 52 small-lot trades per year into a variety of ETF positions through a traditional brokerage mechanism would quickly eat into returns through commissions and bid/ask spreads.

“There just weren't many recordkeeping systems that could accommodate individual ETFs,” says Abrahamson.

One solution is trade aggregation systems, which is what Abrahamson’s group has developed. Under Invest n Retire’s program, smaller trades are aggregated under a larger group plan, keeping transaction costs low while circumventing the fractional share issue. “On the plan level, it’s all whole shares,” says Abrahamson. “But the participants themselves see fractional shares.”

For now, WisdomTree, which launched its own all-ETF platform two years ago, is the only ETF provider jumping into 401(k)s with both feet, targeting a niche of advisers who work with small and midsize companies. It’s a good match: advisers are increasingly comfortable with ETFs, and the smaller plans are unlikely targets for direct 401(k) plan sales from the major investment management firms.

iShares, the world’s largest ETF provider, has dipped a marketing toe in the water: it launched its “iShares in 401(k) Program” in April, which connects financial advisers with iShares-friendly third-party plan providers and administrators.

But despite these entrants, neither Vanguard nor Fidelity Investments—the two largest 401(k) plan providers—have announced any intention to offer ETFs in their plans, even though Vanguard is also the world’s third-largest ETF provider.

Ultimately the main barrier for the larger players may not be technological, but financial. Mutual funds are the vehicle of choice in many 401(k) plans, in part because the higher fee structure allows plans to offset recordkeeping costs through revenue sharing under the funds’ expense ratio umbrella. In ETF-centric 401(k)s, recordkeeping expenses are more transparent, and must be either picked up by the plan sponsor or charged to plan participants as a separate fee.

That level of transparency may be better for investors, but established plan providers have so far been reluctant to change. As more and more ETF recordkeeping systems gain traction, however, they may be forced to adapt.