PLANSPONSOR - November/December 2024 - 16

COVER STORY
A view of the trends
and advances that
mattered most this year
O
ver the past year, plan sponsors have continued implementing
both mandated and optional plan features
under the Setting Every Community Up for Retirement
Enhancement Act and the SECURE 2.0 Act. At the same time,
ongoing technological advancements have enabled sponsors-
and the retirement industry, broadly-to explore new ways to
improve plan efficiency and participant outcomes. Here is a look
at the biggest trends and innovations of 2024.
Sponsors
Embrace AI
The retirement
industry leaned
further into finding the best ways to
harness the power of artificial intelligence
this year; many recordkeepers
and providers have
already incorporated
it into their systems and processes for a range of tasks.
Uses vary widely: Providers such as Financial Finesse employ
AI to power their financial coaching; tech firm vWise uses it
to generate video services for participant education and enrollment;
and TIAA delivers lifetime income solutions and services
via an AI platform.
Plan sponsors and their advisers and vendors are seeking
ways to integrate AI into existing plan design, vs. fully revamping
processes. The industry's embracing of AI has become part of the
ongoing effort to use automation whenever possible to lower costs
and bring more solutions to participants at scale, experts agree.
" AI is evolutionary, not revolutionary, " says David Levine a
16 PLANSPONSOR.COM November - December 2024 Art by Anja Sušanj
partner in Groom Law Group in Washington, noting that providers
have used automation for years for things such as nondiscrimination
testing or to build style-box charts to show fund returns. " AI
allows further customization of all of that, making it more costefficient
to do more with the people you have, " he says.
Meanwhile, participants are growing more open to taking
advice from AI-enabled apps, and that acceptance looks poised to
continue. Deloitte Center for Financial Services estimates that,
by 2027, such apps could become the leading source of retail
investment advice, reaching a 78% share by 2028.
Portability
Makes
Progress
Several recordkeepers continued to
prioritize plan portability this year, with
the goal of automating the process of
moving a retirement plan account from
one plan sponsor to another for smallbalance
participants-i.e., those with less than $7,000 saved.
Retirement Clearing House estimates that, if widely
adopted, portability could grow the net incremental wealth of
participants by $1.6 trillion. This is because, unless portability
to another retirement plan is available, more than half of participants
in such accounts will cash them out immediately on
leaving their employer; 37% will have their balance rolled into
a safe harbor individual retirement account where, according to
an RCH automated portability simulation, it will sit in a money
market fund. Of these accounts, about 8% will either get cashed
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PLANSPONSOR - November/December 2024

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