PLANADVISER - September/October 2021 - 20

managing relationships / cover story
Corning, managing partner at Buckman
& Corning Financial Strategies Group in
Scottsdale, Arizona. Some have only an
internal policy, but hiring a third-party
cybersecurity company can more objectively
assess whether the recordkeeper's
cybersecurity measures are adequate,
she says. " These outside companies
will sign off on how rigorous the protocols
are, instead of the recordkeeper's
self-certification, and that's important. "
Using an outside firm confirms it follows
strict industry standards, Corning says.
2) The use of participant data for
bring it to the committee's attention. "
3) Integration of ancillary savings
ancillary-service promotion. Whether
and how recordkeepers use a participant's
data to market their products
and services to him is increasingly
being scrutinized in lawsuits; several
recent excessive-fee cases have also
addressed who owns this data and
whether plan sponsors have a fiduciary
duty to protect it. " The issue is that
there's an opportunity for the recordkeeper,
with its captive audience of participants, to use
that data to sell participants something at a higher fee than
they would pay otherwise, " says Michael Duckett, a retirement
consultant at Lockton Companies in Washington, D.C.
" We'll ask recordkeepers in an RFI, 'Do you use participant
data for any purpose other than running the 401(k) plan?' "
Invariably, the answer is " yes, " Duckett says. " So we help
the plan sponsor understand how the recordkeeper uses that
data: We want to make sure the sponsor understands, 'Here's
what they're doing with the data, and here's what you can
and can't opt out of,' " he says. If a recordkeeper uses participants'
data to call and try to sell them its wealth management
services, for example, he says, sponsors may feel
concerned about it. " There are many ways this data could be
used-not just the obvious ones. It's an area where things are
developing quickly, so it's important that we ask that question
every time we do an RFI. "
Most committees Corning works with have had no issue
with it so far, because much of the contact has been to offer
financial wellness services that can give their participants
meaningful help. " The committees view it more as a matter
of, 'Are you seeing what our participants need and helping
them meet those needs?' " she says. " As an adviser, I don't like
to see the commoditization of participants, but there's a fine
line between commoditization of participants and actually
giving them services that are helpful to them. "
It can be useful for an adviser to talk with client committees
about where they would like to draw the line on the
recordkeeper's use of participant data. " I think the line will
shift depending on who's on a committee, " Corning says.
" But it's important for an adviser to understand what level
of commoditization is happening with participants-what
kinds of things a plan's participants will be solicited for-and
A recordkeeper
can distinguish
itself by taking
on fiduciary
responsibility
for the one-onone
financial
wellness advice
it gives.
programs. Student loan repayment
programs and emergency savings
programs have become the No. 1 and
No. 2 most urgent issues Corning hears
about from her employer clients. " Right
now, every business owner I know is
trying to recruit and retain employees. I
don't think any is fully staffed right now, "
she says. " So employers are desperate
for ways to give benefits to people that
some other companies may not be
offering. " Plan sponsors and human
resources (HR) professionals also hear
from employees about their financial
stress concerning these issues, she says.
Many recordkeepers are just now
trying to integrate ancillary savings
programs, Deevy says. " More than
anything, employers wonder, 'If we add
one of these, how will this impact us
administratively? Will it mean more
work?' So anything a recordkeeper can
do to streamline that process is helpful. "
Every recordkeeper's ancillary savings program setup
is different right now, says Mark Beaton, a Denver-based
vice president at OneDigital Retirement & Wealth. " Often
they work with only certain vendors. Personally, I'd love
to see more integration between recordkeepers and the
vendors they don't already work with, " he says, because
that would present a more holistic picture of participants'
financial lives. " On the other hand, my concern is bundling
and having all your eggs in one basket: There's always risk
when a plan utilizes one recordkeeper for all of its services. "
The participants may not receive best-in-class products or
services for everything.
The ability to integrate these programs differs among
recordkeepers, and in some cases that is by design, Duckett
says.
" Some providers have strategic relationships with
particular student debt repayment or emergency savings
vendors. Maybe they've built a 'bridge' with two or three
or four vendors, and they don't plan to build one with the
others at this point, " he says. " So in an RFI, we always ask
the recordkeepers: 'Which providers are you integrated with?
And what does that integration feel like: How does a participant
access the ancillary program from your website?' Also,
does the recordkeeper get paid a commission if a participant
uses the ancillary program? " And does the employer platform
allow for participants to direct employer match dollars into
the recordkeeper's student loan debt repayment program or
emergency savings program?
4) Financial wellness program user-friendliness. " Having
financial wellness tools is table stakes for recordkeepers, " says
Braun. " The differentiators now are things such as whether
they have a mobile app that's fully functional for participants. "
Such apps would let a participant initiate changes
20 | planadviser.com September-October 2021
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PLANADVISER - September/October 2021

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