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NAPA-Net Series: Examining How to Spot Opportunity While Proactively Managing Associated Risks

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You may have seen it. At the end of 2024, industry duo Will Prest and Lisa Kottler from KWP Growth Partners, released their RetireTech Map. 

Following the release of the Map, Prest and Kottler issued their Next-Gen 401(k) Report, which identifies 12 key trends and actionable insights to help those in the financial services ecosystem stay competitive.  

While the Map and Report are useful from a competitive perspective, like all evolving fields, legal and compliance challenges are often lurking in the background. 

Those most effective will be the firms and partners that can spot the opportunity while also proactively managing associated risks. In this series of articles, we will address some of the top trends with their associated compliance and legal risks. 

Bonnie in the News NAPA Series Part One Infographic

Key Takeaways:

When looking at partnerships and collaborations:

  • Good fences make good neighbors. The key to good partnerships and collaboration (plus: better outcomes for your clients) is to put the details of the partnership in writing
  • Your agreement doesn’t need to be detailed, lengthy, or too formal
  • Agreements should include marketing, confidentiality, data provisions, and non-solicitation of employees and customers

Using data personalization comes with three major considerations to keep in mind:

  • Permission to share data: Agreements are typically made between the plan sponsor and the service provider, and there may be additional authorization required from the participant
  • Cybersecurity: Plan sponsors are responsible for evaluating the cybersecurity practices of their service providers, and personalization heightens this risk
  • Privacy considerations: As participants interact with tools that assess everything from household income to debt levels and mental health indicators, the lines between financial data and personal data begin to blur

Leveraging AI and similar features can provide GREAT benefit and save time, but there are key considerations for advisors and plan sponsors before jumping in:

  • Think about the associated risks in recording client meetings when it comes to future litigation or regulatory exams.
  • Consider requirements related to books and records that must be retained for both you and your supervising firms.
  • Many AI tools available now, like ChatGPT, are publicly available, and sharing your client’s non-public information with these tools can be a violation of confidentiality provisions.

You can find the full article posted in three parts:

Part One: RetireTech RetireTech Collaboration Fuels Growth, but are Contracts Required?

Part Two: Top 3 Considerations that Come with Retirement Plan Customization

Part Three: AI and Action Items for Retirement Plan Advisors