AI and the Future of Participant Services
Plan sponsors and plan advisers are excited about the prospect that rapid advancement in artificial intelligence technology will eventually help them democratize custom and personalized services—providing scale and reach at a lower cost.
However, the pace at which such technology is advancing has many plan advisers still in discussions with their plan sponsors about the best way to leverage AI tools, which are evolving from generative—creating content from prompts such as text, image or code—to agentic models—executing tasks and making decisions inside a set environment.
“It is starting to almost dominate the conversation in every interaction that I have with our plan sponsors, advisers, consultants and even participants,” says Randy Blaha, vice president of technology for Nationwide’s retirement solutions business. “This is an active dialogue happening across the space.”
For defined contribution plans, a generative AI tool can create content or power a chatbot that answers straightforward participant questions. Agentic AI, on the other hand, could potentially suggest best next steps for participants and then execute transactions on their behalf, working across multiple applications to solve problems in a more interactive way and on a more timely basis.
While plan advisers and other providers may be testing or building programs internally, plan sponsors do not yet have access to products in the marketplace that actually make use of agentic AI.
“We think that over time, there’s a really strong, compelling value proposition,” says Dennis Elliott, head of product and platforms at T. Rowe Price. “But it’s hard to see it just yet, because everyone is still building right now.”
Advisers Showing More Interest Than Sponsors
Plan advisers appear more willing to try out the new technology than plan sponsors. A recent Morningstar survey found that only 5% of sponsors were actively using artificial technology, but roughly half of those not using it would consider doing so. However, 35% of advisers surveyed in Orion’s Advisor Wealthtech Survey said they were already using AI and machine-powered services tools and services to better assist their clients.
“We’re starting to see some experimentation, more in the adviser space, especially at firms that provide a broader range of technology services,” Blaha says. “Those that don’t have those capabilities are really starting to put AI and technology advancements in their own development plans.”
Meanwhile, use cases for generative AI continue to expand, including for things like participant education and more personalized chatbots. AI agents are also increasingly able to help deliver a better experience to plan participants, Blaha says.
“We’re focusing those digital workers in areas that take our associates away from being available for participants and looking at how they can truly make an impact on the customer experience side,” he adds.
Prioritizing Data Security
As plan sponsors become more interested in such products, however, plan advisers are focused on ensuring that best-in-class data security and privacy protections remain in place.
“Particularly when you are starting to pilot a new technology or testing new things and bringing new vendors into the mix, there needs to be a pretty strong vetting process in place,” Elliott says. “That’s probably the biggest risk out there: that if you’re using participant data to create a more personalized experience, you have the right protections in place.”
Providers are also adjusting their offerings to meet the demands of individual clients, which can vary significantly.
“We have companies that want us to build them a generative AI chatbot, and we have other companies that want us to turn off AI for participants,” says Melissa Nysewander, head of Fidelity Investments’ workplace investing artificial intelligence center of excellence . “We have to deal with both angles, and we work regularly with our product team to make sure that we are delivering what clients want and need.”
Educating Participants
As new products come to market, plan advisers will likely need to work with clients to create plans aimed at explaining new features to participants and getting htem comfortable with technology that may feel very foreign to them. David Blanchett, portfolio manager and head of retirement research at PGIM DC Solutions, likens the revolution to online, do-it-yourself tax programs.
“If you were to tell people 30 years ago that tens of millions of people would file their taxes online using TurboTax, they’d think you were crazy,” he says. “They’d say you need an accountant. We’re creating different financial ecosystems and different ways to get advice and guidance.”
In the long term, agentic AI has the potential to reduce friction and make both personalized financial planning and complex transactions easier for plan participants to complete. For example, multiple AI agents working together could ultimately recognize the need for a 401(k) rollover and complete the transaction on behalf of a participant.
“We’re moving to a future where there’s true autonomous decisions and actions being made through AI for individuals in all different ways,” says Amy Chou, chief operating officer of the financial wellness platform Addition Wealth.
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