Recordkeepers Slowly Integrating AI in DC Plans

Cerulli Associates finds that a few DC plans are already using AI on its plan management and back-office strategies
Artificial Intelligence, 401k
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As more consumers plan to adopt artificial intelligence (AI) practices in their daily lives, like ChatGPT, the retirement planning industry is examining its relationship with the functionality.

Research from Cerulli Associates finds that a few defined contribution (DC) plans are already using the technology on its plan management and back-office strategies. For example, Cerulli’s survey of defined contribution investment-only (DCIO) asset managers shows that 16% believe AI’s impact on legal document summaries will be “significantly positive” while 23% anticipate it to be “moderately positive” and 23% expect to see “slightly positive” results.

“Focusing on more day-to-day functionality enhancements, asset managers and recordkeepers have much to gain from implementing AI tools into their back-office operations,” says Adam Barnett, senior analyst at Cerulli.

The report adds how other operations, including beneficiary designations, could benefit for AI enhancement.

“Until recently, beneficiary forms were exclusively paper-based, meaning recordkeepers have decades worth of designations, many of which may have been superseded by newer submissions, marriages, divorces, etc.,” Barnett adds. 

Cerulli’s report notes that not all recordkeepers plan to integrate the technology into their practices, as some worry about accuracy, reliability, and ethics concerns. According to findings, 73% of target-date managers will not incorporate AI into asset allocation selection, glidepath personalization, or glidepath design. Another 67% will not use AI in risk management.

Furthermore, 59% of respondents say that AI will have no material impact on managing target-date products in the next year.  

Instead, several respondents say they would work with third parties to integrate AI without doing the bulk work.

“Establishing partnerships with such firms will be essential for recordkeepers looking to differentiate their financial wellness and engagement capabilities in the next five to 10 years. Partnering with third-party AI providers will enable recordkeepers to focus less on their technology and more on being retirement experts,” says Barnett. “Cerulli believes that AI could play an increased role in the retirement industry. Efforts undertaken now to explore efficiencies will ensure a smooth transition to AI-powered retirement tools of the future.”

SEE ALSO:

More Americans Plan to Rely on Artificial Intelligence

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