Title Image

The Value of Participant Data

The Value of Participant Data

In the tech world, there is an old saying: “if the product is free, you’re not the customer; you’re the product.”  Turns out this was first presented as a concept regarding the relationship between TV networks and viewers way back in 1973.  It’s as true now as it was then!

What does this have to do with retirement plans you might ask.  Well, in several recent ERISA lawsuits the use of participant data by a plan’s provider to cross-sell other products and services has been raised as an ERISA violation both by the plan sponsor and by the providers.  To wit:

“Even worse,” the lawsuit states, “Shell defendants allowed the Fidelity defendants to use plan participants’ highly confidential data, including Social Security numbers, financial assets, investment choices and years of investment history to aggressively market lucrative non-plan retail financial products and services, which enriched Fidelity defendants at the expense of participants’ retirement security.”

We thought it would be interesting to consider the enterprise value of participant data by making some comparisons with the tech and social media giants.  In 2015 a tech blog published these numbers (market capitalization/monthly average user count).  We calculated the 2020 numbers (with some difficulty!).

Value of a User




$158 $246







Amazon $733


What the table is telling us is that the value of one set of eyeballs to Facebook in 2020 for example, is $246.  While this data is far from perfect, there are some obvious conclusions to be drawn.  The value of personal data is more than zero.  The value goes up dramatically if you have something to sell (Alibaba, Amazon) to those users.

So, what is the enterprise value of a large (35,000 participant) plan to a bundled recordkeeper who has other products and services to sell to plan participants?  A conservative guess might be $500 to $750 per participant.  That equates to enterprise value of $17.5 to $26.3 million.

If a retirement plan service provider went to the CFO and asked:  “would you please provide me with each employee’s name, age, SSN, compensation, work status, marital status, home address, email, phone number, financial assets, investment choices and years of investment history so that I can sell them other products and services” what do you think the answer would be?

Should a 401(k) plan sponsor allow their plan recordkeeper to simply capture this value or should they protect it?  The answer seems clear to us.  NWPS protects participant data since we have no investment or other products to peddle.

In a recent large plan Request for Proposal, all bidders were required to agree to stringent non-solicitation provisions in order to bid on the business.  Two of the top 4 providers in the 401(k) business declined to bid on a multi-billion dollar plan because of this provision.

Plan sponsors need to understand the issues here and control the use of participant data by retirement plan service providers.  If you or your clients find that difficult to do, call us.