In Practice March 26, 2025

Tech Issues at Forefront of Wealth Managers’ Focus, Says Wipfli Report

The report notes that advances in technology also come with hurdles such as high costs, integration with existing systems, and data privacy and security.

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Technology is expected to dominate wealth managers’ agendas over the next 12 months as they focus on ways to use tech to spur growth, while addressing cybersecurity and regulatory concerns, according to a report released by accounting and consulting firm Wipfli.

Wipfli’s annual State of the Wealth Management Industry report surveyed 109 wealth management executives about their outlook for 2025 and found technology was a major recurring theme among the respondents. “Technology was a consistent factor across all the themes in this year’s survey, from growth strategies to future ownership change and succession planning,” the report said.

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According to Wipfli’s findings, wealth managers are increasingly using data to influence significant business moves, with 80% saying they use analytics when making data-driven decisions, while only 3% said their firms didn’t collect enough data to be able to use business analytics. Additionally, 61% of respondents said they’re “very likely” to upgrade their data architecture systems over the next 12 months so they can keep up with technological advances, while 58% said they were “very likely” to invest in data analytics.

To help boost revenue and performance, 61% of wealth managers polled said their priorities were to improve data analytics capabilities as well as customer engagement, while 59% said improving talent management was their priority.

The report notes that advances in technology also come with hurdles such as high costs, integration with existing systems, and data privacy and security, which the managers cited as their main concerns regarding data architecture. And for data analytics, the managers said their top three issues are data quality, data privacy, and security.

“Despite the challenges, technology presents a wealth of opportunity for the industry,” the report said, adding that 58% of survey respondents said increased automation is having a major effect on portfolio management and rebalancing. Some 51% said the use of AI marketing tools to reach prospective clients was “largely impactful,” while 54% said they are increasing their management process efficiency through digital platforms and apps.

However, the report also cautions that as the use of customer data grows, so does the need for increased attention to privacy, as 54% of respondents said cybersecurity and data privacy measures were having a significant impact on their business processes.

The report’s findings also suggest most wealth managers are still evaluating and researching how to integrate AI into their firm’s practices. Some 27% of respondents said they are consulting with AI experts, while 25% said they’re analyzing cost-benefit ratios, and 19% said they are benchmarking against industry standards. Another 17% said they are gathering employee feedback, while only 13% said they are conducting AI pilot projects.

“This makes sense for the current state of AI technology,” says Anna Kooi, CPA, partner and leader of Wipfli’s financial services practice. “Most wealth management firms are still in the early stages — exploration rather than transformation.”

Compliance March 26, 2025

Wells Fargo Health Plan Lawsuit Dismissed

The judge argued that the allegations were too speculative to show concrete individual harm and too conjectural to show redressability.

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A U.S. District Judge in Minnesota dismissed a lawsuit filed against Wells Fargo & Company in July 2024 by former employees who claimed that the company mismanaged its health plan and caused employees to overpay for prescription drugs.

Judge Laura M. Provinzino said in the ruling that, under the Employee Retirement Income Security Act, the plaintiffs’ allegations were insufficient to establish Article III standing.

The former employees alleged in Navarro v. Wells Fargo & Co. that Wells Fargo mismanaged the plan’s employee prescription drugs benefits program, resulting in employees paying “substantially more” in premiums and out-of-pocket costs for certain drugs than they would have absent of Wells Fargo’s “mismanagement.”

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The plaintiffs, represented by firms Gustafson Gluek PLLC and Fairmark Partners, LLP, claimed that fiduciaries at the bank agreed to pay its Pharmacy Benefits Manager, Express Scripts, Inc., high prices for generic drugs that were “widely available at drastically lower prices.”

Wells Fargo denied these allegations and filed a motion to dismiss the case in September 2024 for lack of standing or failure to state a claim upon which relief can be granted.

The court found that the former employees could not satisfy Article III’s standing requirements because their alleged harm is “speculative and, ultimately, not redressable.”

In addition, the court said it is speculative that the allegedly excessive fees the plan paid to Express Scripts “had any effect at all” on plaintiffs’ contribution rates and out-of-pocket costs for prescriptions.

“There are simply too many variables in how plan participants’ contribution rates are calculated to make the inferential leaps necessary to elevate plaintiffs’ allegations from merely speculative to plausible,” the court opinion stated.

Although the court sympathized with the plaintiffs and understood its argument about the high cost of prescription drugs, the judge argued that their allegations were too speculative to show concrete individual harm and too conjectural to show redressability.

The complaint was dismissed without prejudice.

In a similar case, current and former participants of the JPMorganChase health insurance plan sued the company earlier this month, alleging the company mismanaged its prescription drug benefit under its health insurance offering.

Under the Consolidated Appropriations Act of 2021, plan sponsors are required to attest that the fees they pay for health care plans are fair and reasonable. As a result, it is important that plan sponsors apply a fiduciary process when evaluating their health plans, including pharmacy benefit managers, as well as remain aware of any pending litigation involving the providers.

The Federal Trade Commission has also released two interim reports, as well as filed an administrative lawsuit against the “big three” PBMs, arguing that these middlemen have opaque business practices and mark up the prices of prescription drugs.

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