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401(k)

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 2015 2020 Facebook $158 $246 Google $182 $500 Alibaba $621 $850 Amazon $733 $3,500 What the table

NWPS Perspective: The SECURE Act

Here is NWPS' memo to clients and advisor partners summarizing The SECURE Act and What It Means to Your Plan.  Here are a few key takeaways for those focused on retirement plans: Increases the required minimum distribution (RMD) age for retirement accounts to 72 (up from 70½) Allows long-term, part-time workers to participate in 401(k) plans Offers more options for lifetime income strategies Permits parents to withdraw up to $5,000 from retirement accounts penalty-free within a year of birth or adoption for qualified expenses   Please contact your NWPS consultant or [email protected] if you have any questions.

Wiz Bang Participant Websites Not a Panacea

We couldn’t agree more! Judy Ward’s terrific article in the May/June edition of PLANADVISOR Magazine hits the nail on the head. Entitled “High Tech Meets High Touch,” the article illustrates how thoughtful advisors blend technology and coaching to successfully engage plan participants. Bemoaning the fact that many service providers spend millions on their retirement calculators and participant websites, only to find that less than 20% of participants even log on to their site once a year, Ms. Ward interviewed a number of successful retirement plan advisors to find the balance between technology and touch. James Lyday, managing director of Pensionmark Nashville is representative of the others interviewed for the article. Everyone thinks participants need snazzy feature such as gamification to get motivated to engage. “A customized retirement income illustration is by far the home run to engage people,” says Lyday, a 2019 PLANSPONSOR Retirement Plan Advisor of the year finalist. Indeed, most participants need real help from a trusted advisor in translating their retirement outlook data into an action plan to improve their situation. Based on her interviews, Ms. Ward puts forth four simple ideas for how to blend technology and touch to build participant engagement: demystify the website calculator, narrow the financial