3 Technology Trends Impacting Retirement Plans

In 2018, the retirement plan market may have finally reached its point of reckoning with major technological developments. Innovation in the sector is constantly happening, and if plan sponsors are unaware of and adapting to it, they – and their employees – could easily find themselves behind the curve. Here are three of the most important tech-driven trends in retirement plan services today.

Plan Platforms Are Going Mobile

Responsive Design. By the end of 2018, there are expected to be more than 235 million smartphone users in the United States, or 73 percent of the entire population. Last year alone, the 50-64 age group saw an increase in smartphone usage of over 16 percent; those of full retirement age saw a similar spike. The United States has gone mobile, and retirement plans are increasingly being placed in participants’ pockets.

Because of this shift, mobile app design is becoming a priority for many plan sponsors. The ability to access information about retirement accounts from anywhere and to flexibly make and implement decisions matters to most employees. Designing websites to be compatible with not only smartphones, but other mobile devices such as tablets and wearables, is increasingly becoming standard.

Online Resources Are Getting Better at Personalizing Plans

Personalization. Artificial intelligence is changing the way companies in nearly every industry do business. One channel by which that is most clearly demonstrated in the retirement planning sector is in the proliferation of automated tools that incorporate personal information into investment and retirement planning. While human financial advisors have long been able to individualize 401(k) investment strategies, there has been a recent push to automate this type of evaluation.

Many retirement planning websites now feature a bevy of digital tools designed to assess a given person’s financial situation before any human-to-human interaction occurs. By providing people access to platforms that enable them to gauge their financial situation on their own, plan sponsors are able to boost engagement with the planning process and eliminate a lot of the rote work which advisors have traditionally been responsible for.

Automated Advisors. At the cutting edge of this AI-driven trend are full-stop “robo-advisors,” which function as replacements for their human counterparts. While the day that robots are able to fill this role as capably and completely as humans is still far off, there are certain less-nuanced job functions, such as answering basic questions about the different types of retirement accounts or calculating necessary savings rates, that robo-advisors are already completely qualified for.

The long-term positive impact of this trend is clear: Costs will continue to diminish. The more basic, administrative functions of retirement planning that can be handed off to AI-driven machines, the cheaper it becomes for participants to meet their needs.

Cybersecurity is a Requirement, Not a Suggestion

As hackers employ ever more creative means to obtain sensitive information, retirement accounts remain one of the juiciest targets available. While there is no federal framework specifying the cybersecurity requirements plan sponsors must meet yet, there has been a strong legislative push in that direction lately. It is likely only a matter of time until regulations are put in place.

Many states already have provisions that require plan sponsors to at least be responsible in this regard. Nearly every state requires institutions to promptly notify plan participants and credit agencies promptly in the event of a data breach, and others require further action when one has been identified. Illinois and Michigan, for example, both require agencies to place a freeze on all consumer credit files impacted by a security lapse. Plan sponsors could find themselves mired in a legal situation if they fail to communicate sensitive information regarding a breach in a timely fashion. More to the point, employees have a right to expect that their plan providers will offer them a reasonable level of protection against data breaches that might compromise their personal information.

The concerning thing for retirement plan sponsors and their plan advisors and vendors is the adaptability of today’s hackers. While there are several basic steps plan sponsors can and should take, it is almost impossible to be fully protected without consultation with specialists. PlanPILOT has a reputable, consistent and proven process designed to protect client information. If your organization is concerned about the possibility of a breach, learn more about what we can do to allay those concerns.

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