Stop Using Your Clients' 401(k) Logins

Thanks to a new partnership with Pontera announced in late January, Commonwealth’s affiliated advisors can now “seamlessly” manage their clients’ workplace retirement plan assets, but perhaps even more importantly, they can do this work in a professionally secured digital environment.

In fact, as Pontera’s chief business officer, David Goldman, recently told ThinkAdvisor, the firm’s ability to help advisors efficiently monitor, trade and rebalance their clients’ 401(k) plan assets from a unified interface is a big deal, but another key part of the value proposition is the unyielding focus on cybersecurity.

“Look, any advisor can borrow their clients’ log-in credentials and make trades in their retirement plan account,” Goldman said. “But that process is cumbersome, and what many advisors probably don’t realize is that they are running big regulatory and cybersecurity risks by collecting and maintaining their clients’ passwords and usernames. Most advisors aren’t taking steps to encrypt this data, for example, and they may not be adequately monitoring for potential breaches.”

No advisor wants to see their clients’ hard-earned retirement assets put in jeopardy, and there is also the potential personal and professional liability to consider, especially since the typical tax-advantaged retirement account is going to be subject to the rules and requirements of the Employee Retirement Income Security Act. There are also questions about whether advisors can adequately document and report such activity to their home office or regulatory authorities.

According to Goldman, the new Commonwealth partnership is Pontera’s largest publicly announced agreement with a national registered Investment advisor firm, and he said the cybersecurity story his firm can tell was an important part of the equation — in addition to Commonwealth’s strong interest in helping advisors support the management of retirement accounts at scale.

“We are thrilled about this partnership with Commonwealth. They’re a real titan in the wealth management industry,” Goldman said. “We look forward to equipping Commonwealth advisors with the tools to integrate 401(k) and 403(b) assets into custom financial strategies for their clients. This comprehensive approach is vital to creating superior financial outcomes for retirement savers.”

Holistic Advice Is In Demand

Goldman said he agrees strongly with the proposition that the traditionally distinct worlds of private wealth management and workplace retirement accounts are quickly coming together, thanks to a number of interrelated factors that include organic client demand and legislative tailwinds.

“Todays’ advisors are being asked to make an even greater impact on their clients’ holistic financial well-being,” Goldman said. This means advisors are being asked to integrate retirement assets efficiently and effectively into the broader financial planning process, thereby elevating their ability to deliver comprehensive services for their clients.

And, as Goldman pointed out, the median American family now holds the majority of their net worth in workplace retirement plan accounts. Long gone are the days when “workplace retirement planning” simply involved sizing up the client’s guaranteed pension check that kicked in at retirement and lasted for life. Today, there is so much more pressure placed on individuals to manage their own retirement assets and income.