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
Fastest growing national independent 401(k) and retirement plan recordkeeping and administration firm announces acquisition solidifying ability to meet growing demand for conflict free, un-bundled services in the post-DOL fiduciary rule 401(k) marketplace.
In the old days, some plan sponsors treated 401k investment menus like a restaurant menu. If somebody (influential) wanted a fund in the lineup it was added. The result of this in many plans were investment menus with too many funds, overlapping funds and dominated funds. Lineups like that are confusing to participants and result in poor(er) asset allocation.