Client Service October 4, 2022

Participant Data is Key to Developing Better Financial Wellness Programs

Participants are comfortable with providing a variety of personal data points to their financial advisers, in the hopes that they will, in turn, receive more personalized and relevant financial advice.

Reported by



In an increasingly digital age, most 401(k) participants are either “comfortable” or “very comfortable” providing many distinct personal data points to their plan providers, according to a new report from Cerulli.

Individuals are willing to turn over their personal information to service and platform providers, as long as that data is being used to personalize their investment advice and financial wellness experience, according to Cerulli’s “U.S. Asset and Wealth Management” report. Without a holistic view of a participant’s financial situation, financial wellness experiences can feel generic and less relevant to the end user’s circumstances.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Plan providers are leveraging this data to construct a more detailed financial profile for individual participants on their platforms, delivering more personalized in-plan financial wellness, coaching, and portfolio management experiences, the report states. This has also helped plan advisers create more informed plan design recommendations for their plan sponsor clients and allowed for providers to anticipate and address their participants’ broader financial needs.

Participants are sharing more personal data about themselves and are more likely to turn to financial professionals above other sources of investing information and advice except for “myself” or a spouse/partner, with use of financial professionals up to 71% in 2021 vs. 68% in 2010, according to a Hearts & Wallets report. Use of paid financial professionals is now at 47%. Use of “other” types of financial professionals is at 64% today, including phone-based mutual fund companies or online brokerage representatives, accountants, bank representatives and insurance representatives.

Participants are either “comfortable” or “very comfortable” sharing information on their gender (91%), race or ethnicity (88%), household income (85%), expected retirement age (82%), family structure (83%), retirement savings/account balances (75%) and non-retirement savings/account balances (70%), the report states. They have also shared data, though sometimes less often, on credit card debt, weight/body mass index, smoking status, chronic health conditions and student loan debt.

Plan advisers and sponsors dedicate significant resources to helping participants address their financial situations more holistically and solve their “next dollar” problems, the report states. The vast majority (94%) of recordkeepers offer a financial wellness program, whether a proprietary program, a third-party program, or a combination. Yet there are no universal criteria for what constitutes a financial wellness program, and the structure and efficacy of these programs can differ from one provider to another.

While some providers offer data-driven, interactive, user-friendly programs that allow participants to make informed decisions in a holistic context, others offer more fragmented solutions, the report states. Holistic, user-friendly financial guidance and advice engagements not only enhance the competitive positioning recordkeepers offer to plan sponsors, but also help providers gain a deeper understanding of the participants on their platform, deliver more meaningful, impactful engagements, and proactively anticipate the needs of investors.

According to Hearts & Wallets, 65% of households in 2021 say they want to make decisions and manage money on their own with the preference to delegate dropping to 12% in 2021 from 20% in 2010. There is a bit of a disconnect, however, with 60% of households who prefer self-direction using some type of financial professional. An increasing number of Americans rely on multiple information sources, with 43% of households using seven or more sources today, nearly triple the 14% of households in 2010.

Cerulli suggests providers use participant data to create messaging, schedule touchpoints and deliver engagement that resonates with participants. Providers can leverage complete participant profiles by making participants aware of investment products, savings accounts, individual retirement accounts and other services that are more likely to address their needs at that point in time. An example could be recordkeepers or advisers targeting high-balance participants nearing retirement as a potential fit for their wealth management business.

Cerulli recommends recordkeepers use participant engagements, both virtual and phone-based, as opportunities to flesh out participant profiles. Within this context, providers can ask thoughtful questions about participants’ financial concerns, goals, and recent life changes to update their existing participant profiles.

Having this much personal data could lead to misuse and comes with considerable risk, the report warns. Some sponsors have expressed concerns with how recordkeepers and other plan providers use their participant’s sensitive personal information, with several recordkeepers accused of inappropriately cross-selling participant data. Defined contribution plans are also seen as attractive targets for cybercriminals.

Compliance October 4, 2022

Class Settlement Approved for AAA Carolinas ERISA Lawsuit

The lawsuit alleged fiduciary breaches to retirement plan participants from high fees and underperforming investments.  

Reported by


A $500,000 class settlement between AAA Carolinas and former employees has received early approval in a North Carolina federal court. The plaintiffs brought a lawsuit that alleged retirement plan fiduciaries breached their duties to retirement plan participants.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Under the terms of the settlement agreement, signed by defendants Carolina Motor Club Inc. and the Auto Club Group, over 2,000 current and former workers who receive benefits through the AAA Carolinas 401(k) plan will be covered.

The agreement received early approval from Judge Max O. Cogburn, Jr., United States District Court Judge for the Western District of North Carolina, Charlotte Division. The defendants denied any wrongdoing but agreed to settle the case in part to avoid the substantial costs of litigation, according to the settlement and stipulation.

Judge Cogburn defined the class period as beginning July 6, 2014, through the date the court grants preliminary approval of the settlement. Approval of class settlement resulted from negotiations between the parties to the lawsuit, judge Cogburn wrote in the class settlement order.  

“Plaintiffs and defendants, through counsel, conducted extensive, arm’s-length negotiations concerning a possible compromise and settlement of the action, including a day-long mediation,” Judge Cogburn, Jr., stated. “The parties exchanged mediation statements, which included argument, analysis, and damages calculations of consulting experts. Following negotiations, the parties reached agreement on material terms of the settlement, including the amount of the settlement fund and non-monetary relief, as set forth herein.”

By agreeing to a class settlement, defendants did not admit to fiduciary breach resulting in alleged harm to participants for retirement plan losses or any wrongdoing. 

“The Court has not decided in favor of either side in the action,” Cogburn stated.

“The settlement agreement, and these proceedings related to the approval of the settlement agreement, and this order are not evidence of any liability, responsibility, fault, or wrongdoing on the part of any party including any party receiving a release,” according to the settlement agreement and stipulation.

By the terms of the class settlement, defendants will pay or cause their insurance carrier to pay $500,000 into an account at a financial institution identified by class counsel, comprising the ‘Settlement Fund.’

The settlement amount includes expenses for administering the settlement, taxes, expenses and fees incurred for an independent fiduciary’s review of the settlement for the plan as well as court-approved attorney’s fees, expenses and compensation to the plaintiffs, the order states. 

“The net amount of the settlement fund, after payment of the aforementioned costs and expenses, will be allocated to the settlement class members according to the approved plan of allocation, if and when the court enters an order finally approving the settlement,” judge Cogburn stated.  

Plaintiffs brought the original lawsuit in 2021. The lawsuit alleged plan fiduciaries mismanaged the 401(k) plan, caused fiduciary breaches and failed to review the plan’s recordkeeping expenses through the request for proposal process periodically. Specifically, plaintiffs argued the retirement plan caused harm to participants, and was filled with high-priced and underperforming investment options.  

By the terms of the class settlement, defendants must agree that within two years of complete settlement approval, the Auto Club, directly or through its plan fiduciary committee, will conduct a request for proposal for recordkeeping services for the 401(k) plan.

AAA Carolinas did not respond to a request for comment on the class settlement.

«

Please turn off ad blocker to view.