text of code on computers(Photo: Shutterstock)

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Retirement plan providers that collect comprehensive employeedata in an effort to promote financial wellness now face a new challenge: that of better safeguardingthat data.

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A new report from Cerulli, "U.S. Retirement Markets 2019:Looking Toward Holistic Solutions for Participants and PlanSponsors," finds that cybersecurity needs to be stepped up in theface of new methods of customizing financial wellness efforts.

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As tech becomes more advanced and allows greater opportunitiesfor customization of financial wellness programs that covereverything from budgeting and debt management to investing, collegeplanning, Social Security optimization and retirement income, thepotential for trouble has also increased.

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"[T]echnology has the potential to standardize recommendations,combat human biases, and at the very least alleviate some of themore time-intensive, computational aspects of portfolio managementand financial planning," Anastasia Krymkowski, ASA, associatedirector at Cerulli, is quoted saying in the report.

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However, along with all these opportunities to become moredirectly involved in plan participants' financial well-being comesthe responsibility to safeguard the personalized information thatmakes it all possible.

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Says the report, "[C]ybersecurity has emerged as a top issue forretirement specialist advisors—80 percent rate datasecurity/cybersecurity very important, deeming it the single mostimportant factor when evaluating recordkeepers."

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But it's also going to cost plan providers more—in particularrecordkeepers and third-party administrators. "In a digital age,these firms essentially double as technology companies, with plansponsors and their consultants/advisors closely scrutinizingsecurity procedures and policies," Krymkowski is quoted saying,adding, "It is critical for providers to maintain accurate datarepresenting participants' transactions while safeguarding theirassets and confidential information."

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Not only do providers need to protect client data ranging fromSocial Security numbers to credit card debt and outstanding studentloans, they're also now playing host to deeply personal informationon such topics as career satisfaction, work productivity, personalrelationships, smoking status and sleep patterns.

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That's a treasure trove for cyberthieves, and health data bringalong their own particular requirements for safeguards: ProtectedHealth Information (PHI) under the Health Insurance Portability andAccountability Act (HIPAA) carries its own obligations forprotection.

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Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.