Data is integral to every aspect of retirement. The plan sponsor, the advisor, the record keeper, and the participants themselves all require timely access to accurate, up-to-date participant, plan and investment data to successfully service participants toward retirement. The retirement industry is armed with more data than ever before, thanks to 401(k) technology that can transfer vast amounts of data at increasingly rapid speeds.
But with all the information that exists in the industry, why can we still not have a holistic view of participant data in a singular place?
In retirement technology today we can transfer and process entire files between two disparate systems—this is happening in 1:1 exchange channels: advisor to participant, plan sponsor to record keeper, etc. While individual business groups in the retirement industry are tracking the participant information that they need or is required of them, it is not comprehensive, and it is not in a standardized format. Instead of seeing the complete picture, it is as if each industry group is receiving a single puzzle piece.
What if advisors could see it all? To effectively advance the retirement industry, participant data must be available, portable and mobile. There must be a communication network with a unified backend system that allows for all business groups in the industry to speak to each other—trading transfers, enrollments, rollovers to name a few, would all be accessible. Establishing an ATM-like system for the retirement industry would mean that a millennial, by retirement, could feasibly have a singular retirement account that has been with them for 40-plus years.
A connected financial life network would be so named, however, because it would include more than just the retirement industry. It would include participant banking, insurance and healthcare information. Including the financial information from these sectors, in addition to retirement, could provide a holistic financial picture that would help the retirement industry better service the participant.
Take healthcare, for example. As participants age, retirement payments are, and are going to be, increasingly dependent upon healthcare costs. Minus non-contributors, the greatest single point of deficit in the retirement industry is medical costs.
A connected financial life network would include a universal communication network for both retirement and healthcare industries. Imagine what advisors could do with the insights facilitated by capturing and combining participant retirement and healthcare, banking, insurance and loan information. Advisors could connect with their non-contributors, low contributors, even high contributors with unprecedented understanding.
Creating the Financial Life Network’s unified backend systems—a concept we’ve developed and discussed for some time—would provide structure and simplicity, which could translate into increasing participant engagement and also into increased interoperability. Such large-scale, unprecedented access to financial data would make planning, saving, implementing and tracking retirement at all levels easier. Data flow in a unified financial network would provide data that is not only comprehensive, but strategic.
Cait O’Connor is a business development specialist with Ithaca, New York-based 401(k) technology solutions provider Envisage Information Systems.
