I recently set up my first computer, an Atari 400 computer from the days of Asteroids and Pong, for the first time in decades. As a kid, I spent hours learning how to program and rewrite existing software on this computer. Eventually, I moved beyond my technology roots and became a lawyer and then a benefits lawyer. Now my two worlds have converged as an old new topic has come to the forefront in the retirement industry: the use of data and data security.
Data and security have been significant areas of focus in the retirement industry for a long time. However, as the retirement industry has moved more and more to enhanced technologies and the use of data has become ever more central to the industry, there is more attention being paid by both regulators and plaintiffs firms to these topics than ever. Advisors play a key role in addressing these topics as follows:
- Data Breach Litigation. Fraud and impersonation have long been a concern for participants and retirement plan sponsors. Recently, plaintiffs have field a number of lawsuits relating to the takeover and liquidation of participant accounts by fraudsters. In addition, there continue to be increasing attempts to breach service provider systems. To the extent that advisors have access to participant data or discretion over participant accounts, advisors may benefit from the lessons learned from these cases in evaluating there data security practices.
- Privacy Litigation. Data security litigation is often intertwined with claims about how data related to a plan is used by plan service providers. Historically, many advisors had limited exposure to participant-level data. However, as many advisors have expanded their services and offerings, such as wellness, in-plan advice and management, and general wealth management, some advisors may have increasing access to participant data. Advisors can benefit from watching the evolution of this litigation and how data privacy is addressed as part of their own service offerings.
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- Department of Labor Initiatives. Very recently, the Department of Labor has begun to increasingly focus on providing guidance on security and data issues and is now actively asking security and data-related questions in investigations of plans and service providers. Answering these questions often require depth of knowledge that fuses an understanding of technology and ERISA requirements that is often separated by a chasm in the silos of a service provider’s organization. An advisor can play an essential role in bridging that gap.
- Vendor Management. Historically, a central focus on an advisor’s practice has been to support her or his clients in evaluating potential plan vendors’ services. The focus of these evaluations has often been on pricing, service teams, and service offerings. However, with the rise in prominence of data security and usage, an advisor can provide significant value to her or his clients through a focus on security processes, insurance levels, and data usage provisions. This knowledge can both help provide leading edge support for clients while also differentiating an advisor’s services from potential competitors.
Retirement plan data and security issues are likely to continue to garner increasing attention in the next several years. These topics impact advisors own clients as well as their businesses. By staying up to date and focusing on this rapidly evolving area, retirement advisors can have the ability to better serve their clients while enhancing their advisory businesses as a whole.
David N. Levine is a principal with Groom Law Group, Chartered, in Washington, DC. This column appears in the latest issue of NAPA Net the Magazine.
