It’s no secret that the use of proprietary funds has been on a steady decline for years. As a result, the largest providers (mutual fund and insurance companies) are scrambling for new sources of revenue, including demanding shelf space (or the vaguely worded ‘infrastructure’) payments from fund companies and additional fees to plan sponsors and participants.
Enter Big Data. The dominant providers in the 401(k) business (mutual fund and insurance companies) are mining participant data to reveal opportunities for cross-selling other financial products and services.
While not a concern to Northwest Plan Services (NWPS), as we are not an asset gatherer and have nothing to sell to participants, this last effort (cross selling) is being examined in a new and significant light.
Enter tort terror Jerome Schlichter, the notable protector of participant costs and now apparently, participant data.
In the recent Vanderbilt University case, Schlichter and his clients, the participants of the University’s 403(b) plan, claim the University allowed excessive fees to permeate their plan. Plaintiffs then filed an amended complaint accusing the University of failing to protect plan data by allowing their service providers (at the time Fidelity, TIAA and 2 others) to market products and services to plan participants.
Vanderbilt recently settled the