The question of data management is critical in the retirement planning space. Advisors need accurate data to keep careful tabs on participants, make recommendations in their best interest, and offer the right products and services at the right time.

It’s crucial for every advisor to clearly understand who is in each plan and keep records current to avoid compliance risks and provide the best possible participant experience. Here is a quick look at some risks you may be exposed to if you don’t tune in to what’s happening with your participant data. 

Risk #1: Compliance Issues

The industry faces compliance burdens from legislation like SECURE 2.0 and Regulation Best Interest (BI). Regulation BI requires careful data maintenance to ensure participants understand each option and make recommendations that are truly in the best interest of each client. 

Risk #2: Incorrect Advice

Not every participant should receive the same advice and guidance from you. Age fields are a primary filter for correctly routing information and resources to each client. If these are out of date or empty, you may share information that is irrelevant to the employee’s life stage. Incorrect or poorly timed advice can lead to poor participant experience and erosion of trust. 

Risk #3: Inaccurate or Impersonal Communications 

Inaccurate records can lead to impersonal or incorrect communications. If name fields aren’t well-maintained, you may send an email with the wrong name in the salutation. This kind of error will increase the likelihood of a participant disregarding your messages. Keeping records up to date is essential to help you maintain a personal relationship with your participants.

Risk #4: Incorrect Payments and Outdated Beneficiaries 

Your plan sponsor will rely on you to keep records up to date and free of errors. For DC and pension plans, you should update records regularly and remove deceased employees to ensure that the correct, current beneficiary receives the benefit. Plus, if a plan sponsor wants to terminate or change a plan, data that isn’t maintained will delay the process and could cause you to incur additional costs to do a cleanup or audit. 

These risks are just a few of the reasons you may want to clean up your act when it comes to data - soon. To read the full article and learn how to get started with better data practices, click here.