Breaking Down the Use of Client Passwords in 401(k), 401(b) and 457 Account Management: Opportunities for Advisors with Absolute Capital
February 28, 2025
Breaking Down the Use of Client Passwords in 401(k), 401(b) and 457 Account Management: Opportunities for Advisors with Absolute Capital
Understanding Fintech Providers and Client Passwords
Recent developments in the financial services industry have left many RIAs rethinking their strategies for managing held-away accounts. Custodial providers and state regulators are voicing their concerns over access methods that may undermine fiduciary obligations, client information security protocols, and the underlying plan rules. These developments underscore the importance of choosing an approach to 401(k) account management that works within the framework of each plan’s design and custodial client information security protocols. For advisors seeking a reliable alternative, Absolute Capital provides a proven solution that not only fills the gap left by credential-only fintech providers, but also enhances the way advisors manage workplace retirement accounts.
What Happened?
One major custodian’s recent announcement that they are moving to block access for advisors using technology reliant on the underlying client username and password came as no surprise. The use of client password sharing and the circumnavigation of MFA technology by fintech providers is a red flag to many constituencies, advisors included. While some advisors have become quite articulate with rationalizing the use of client passwords (“but the client signed a form saying I could” even though that form was not from the record keeper), the advisors inherently know they are impersonating the client (acting as a ‘ghost advisor’). These practices raised questions about security, compliance, and long-term viability of using these types of solutions.
Why It Matters
The situation highlights the growing need for:
- Secure Access: Advisors must ensure they can manage 401(k) accounts without compromising client credentials.
- Plan Mandate Adherence: While many retirement plans permit third-party management, not all do. Advisors should respect the specific rules of plans that do not allow external access, ensuring they remain compliant and uphold ethical standards.
- Comprehensive, Scalable Solutions: Advisors require solutions that go beyond just a means of account access to provide for full account management to include risk-aligned portfolios, direct advisory fee debiting and automated trading.
How Absolute Capital Navigates Plan & Advisor Needs
Absolute Capital has been a trusted partner to RIAs for over two decades, offering a platform designed with advisors in mind. Unlike fintech-only solutions that offer account access only, Absolute Capital’s W.I.N. (Workplace Investment Navigator) is a platform designed by advisors for advisors, delivering a comprehensive approach to accessing, allocating, billing and trading 401(k) accounts.
Key Benefits of Absolute Capital
- Secure Access: Absolute Capital avoids methods like password sharing, instead leveraging secure custodial interfaces to responsibly and transparently manage held-away accounts.
- Direct Fee Withdrawal: Simplify billing and enhance transparency by enabling fee withdrawal directly from employer-sponsored plans (no debiting brokerage accounts or ACH withdrawals).
- Automated Trading: Hundreds of diligenced SMA Models can be combined in UMA format alleviating the need to trade accounts individually.
- Alignment of Interest: Unlike tech-only solutions, Absolute Capital is an RIA partner that has designed a specialty TAMP (Turnkey Asset Management Platform) solution built for advisors, by advisors.
Case Study: Transitioning from Passwords to Absolute Capital
The Challenge: An advisory firm with a significant number of clients holding workplace retirement accounts knew they needed to move away from a client password-based solution.
The Solution: After transitioning to Absolute Capital’s W.I.N. platform, the firm achieved:
- Robust risk-alignment of portfolios with funds, ETFs and stocks beyond the core menu
- Automated trading
- Embedded advisory fee deduction
- Peace of mind in not using shared client credentials
- They were no longer just a “ghost advisor” on the accounts
The Results: The firm saved notable employee hours due to the scalability of the W.I.N. platform; trading, billing and reporting all in one. They not only retained existing clients but also attracted new ones through referrals, citing the W.I.N. platform’s reliability, scalability and transparency as key differentiators.
Of note: It’s important to note that because Absolute Capital does not rely on password sharing, and because everything we do is designed to fit with the intentions of workplace retirement plan design, that not all workplace retirement accounts can be managed by Absolute Capital. This is admittedly a trade-off, but one that we firmly believe leads to a more solid foundation for your practice.
Why Advisors Should Act Now
Advisors who want to seize the tremendous opportunity in 401(k), 403(b) and 457 account management need to evaluate their approach to managing these assets. By partnering with Absolute Capital, advisors can:
- Protect their business interests by aligning with a comprehensive platform solution
- Enhance client trust with a transparent, sustainable solution.
- Position their practice for long-term growth with a scalable, specialized approach to this space
Take the Next Step
Managing workplace retirement accounts is a critical opportunity for growth, and Absolute Capital is here to help.
Click the button below to get in touch with Absolute Capital today:
Contact Us
Breaking Down the Use of Client Passwords in 401(k), 401(b) and 457 Account Management: Opportunities for Advisors with Absolute Capital
Understanding Fintech Providers and Client Passwords
Recent developments in the financial services industry have left many RIAs rethinking their strategies for managing held-away accounts. Custodial providers and state regulators are voicing their concerns over access methods that may undermine fiduciary obligations, client information security protocols, and the underlying plan rules. These developments underscore the importance of choosing an approach to 401(k) account management that works within the framework of each plan’s design and custodial client information security protocols. For advisors seeking a reliable alternative, Absolute Capital provides a proven solution that not only fills the gap left by credential-only fintech providers, but also enhances the way advisors manage workplace retirement accounts.
What Happened?
One major custodian’s recent announcement that they are moving to block access for advisors using technology reliant on the underlying client username and password came as no surprise. The use of client password sharing and the circumnavigation of MFA technology by fintech providers is a red flag to many constituencies, advisors included. While some advisors have become quite articulate with rationalizing the use of client passwords (“but the client signed a form saying I could” even though that form was not from the record keeper), the advisors inherently know they are impersonating the client (acting as a ‘ghost advisor’). These practices raised questions about security, compliance, and long-term viability of using these types of solutions.
Why It Matters
The situation highlights the growing need for:
- Secure Access: Advisors must ensure they can manage 401(k) accounts without compromising client credentials.
- Plan Mandate Adherence: While many retirement plans permit third-party management, not all do. Advisors should respect the specific rules of plans that do not allow external access, ensuring they remain compliant and uphold ethical standards.
- Comprehensive, Scalable Solutions: Advisors require solutions that go beyond just a means of account access to provide for full account management to include risk-aligned portfolios, direct advisory fee debiting and automated trading.
How Absolute Capital Navigates Plan & Advisor Needs
Absolute Capital has been a trusted partner to RIAs for over two decades, offering a platform designed with advisors in mind. Unlike fintech-only solutions that offer account access only, Absolute Capital’s W.I.N. (Workplace Investment Navigator) is a platform designed by advisors for advisors, delivering a comprehensive approach to accessing, allocating, billing and trading 401(k) accounts.
Key Benefits of Absolute Capital
- Secure Access: Absolute Capital avoids methods like password sharing, instead leveraging secure custodial interfaces to responsibly and transparently manage held-away accounts.
- Direct Fee Withdrawal: Simplify billing and enhance transparency by enabling fee withdrawal directly from employer-sponsored plans (no debiting brokerage accounts or ACH withdrawals).
- Automated Trading: Hundreds of diligenced SMA Models can be combined in UMA format alleviating the need to trade accounts individually.
- Alignment of Interest: Unlike tech-only solutions, Absolute Capital is an RIA partner that has designed a specialty TAMP (Turnkey Asset Management Platform) solution built for advisors, by advisors.
Case Study: Transitioning from Passwords to Absolute Capital
The Challenge: An advisory firm with a significant number of clients holding workplace retirement accounts knew they needed to move away from a client password-based solution.
The Solution: After transitioning to Absolute Capital’s W.I.N. platform, the firm achieved:
- Robust risk-alignment of portfolios with funds, ETFs and stocks beyond the core menu
- Automated trading
- Embedded advisory fee deduction
- Peace of mind in not using shared client credentials
- They were no longer just a “ghost advisor” on the accounts
The Results: The firm saved notable employee hours due to the scalability of the W.I.N. platform; trading, billing and reporting all in one. They not only retained existing clients but also attracted new ones through referrals, citing the W.I.N. platform’s reliability, scalability and transparency as key differentiators.
Of note: It’s important to note that because Absolute Capital does not rely on password sharing, and because everything we do is designed to fit with the intentions of workplace retirement plan design, that not all workplace retirement accounts can be managed by Absolute Capital. This is admittedly a trade-off, but one that we firmly believe leads to a more solid foundation for your practice.
Why Advisors Should Act Now
Advisors who want to seize the tremendous opportunity in 401(k), 403(b) and 457 account management need to evaluate their approach to managing these assets. By partnering with Absolute Capital, advisors can:
- Protect their business interests by aligning with a comprehensive platform solution
- Enhance client trust with a transparent, sustainable solution.
- Position their practice for long-term growth with a scalable, specialized approach to this space
Take the Next Step
Managing workplace retirement accounts is a critical opportunity for growth, and Absolute Capital is here to help.
Click the button below to get in touch with Absolute Capital today:
Contact Us
