For many financial advisors, working with retirement plans can offer a new client pipeline for the wealth management side of their business. As individuals exit their employer-sponsored plans, they may opt to continue working with the advisor for personal investment management and retirement planning advice.
But the retirement plan industry’s fragmented approach to storing and sharing participant data can derail this. The Cassell v. Vanderbilt settlement has also sparked debate over the ownership, value and usage of certain types of plan data.
What everyone seems to agree on—including plan fiduciaries, record-keepers, custodians and plan participants—is that plan participants need and want independent, professional advice and guidance when it comes to financial planning for, and in, retirement.
This is why advisors need to confirm agreed-upon data sharing protocols at the outset of their plan sponsor relationships. It is in everyone’s best interest to protect participant plan data in a way that enables a seamless transfer of information so that advisors can deliver retirement planning guidance and advice.
Without clear agreement on data sharing, advisors may lack the most up-to-date data on the participants they serve. This, in turn, can limit the effectiveness of a retirement plan program, with subpar outcomes that were unintended by the plan sponsor.
For example, most advisors are not automatically informed when participants are exiting or have exited their employer-sponsored plans—whether due to retirement, employment changes or other reasons. In some cases, contact details of exiting plan participants are not shared with the advisor—even though he or she has been in contact with these individuals directly through their employer sponsored plan.
When it comes to their retirement plan offerings, the overarching goal for most company leadership, whether plan fiduciaries or not, is typically that everyone in the organization has the opportunity to be in a position to retire. To help them fulfill their duty, it follows that advisors need access to key data to assist their individual employees—the plan participants.
The wealth management industry is clearly further along in sharing client data for non-ERISA accounts. Technology vendor integration has advanced to the point where financial advisors can run their entire business off of one open-architecture platform with the proper cybersecurity and privacy protocols in place.
Frankly, it is not a stretch to see this happen in the retirement plan world as well. It is only a matter of time.
Getting Guardrails In Place