For years, if you asked a 401(k) plan sponsor what their top concern was, you’d get a predictable answer: cost. Cutting expenses. Reducing fees. Pinching pennies. And it made sense. In a post-fee lawsuit world, with advisors and fiduciaries sweating bullets over every basis point, plan sponsors were laser-focused on keeping costs down.
But according to Escalent’s 2025 Retirement Planscape report, the times, they are a-changin’. Just 40% of plan sponsors now say that reducing plan costs is a priority, down from 50% last year. That’s not a gentle slope; that’s a pretty steep drop. And in its place? Cybersecurity and artificial intelligence.
We’ve entered the era where cost is no longer king. Fear is.
Let’s talk about fear first—cybersecurity. Seventy percent of all plan sponsors reported experiencing a 401(k)-related data breach in the last year. That’s not a rounding error. That’s an epidemic. And it’s not just the small guys fumbling with passwords taped to their monitors. Even 10% of large-mega plans (those managing $100 million or more) got hit. It’s not a matter of if your plan will get attacked, it’s when.
And the DOL knows it. Last September, they extended their cybersecurity guidance beyond retirement plans to include health and welfare plans too. In other words, they’re acknowledging that your participant data is as much a fiduciary liability as your investment menu. That’s a sea change. A plan sponsor that isn’t taking cybersecurity seriously today is tomorrow’s front-page fiduciary disaster.
Sonia Davis from Escalent hit the nail on the head: sponsors are trying to wrap their arms around this new landscape. They’re putting protocols in place, tightening up access controls, vetting their providers more carefully—and, let’s be honest, bracing for lawsuits if and when something goes wrong. Because in this world, a data breach isn’t just an IT issue—it’s a fiduciary time bomb.
But alongside the fear, there’s also a bit of optimism. That’s where AI comes in.
The same plan sponsors that are sweating bullets over data hacks are also starting to see AI as a solution, not just a risk. Sixty-six percent of sponsors managing $100 million or more believe AI can offer a better participant experience. We’re talking virtual assistants answering 401(k) questions, tailored simulations for retirement outcomes, and more personalized engagement.
That’s not fluff. That’s meaningful evolution. If we want participants to take their retirement savings seriously, we need to meet them where they are, with tools that don’t feel like they were built in 1998. AI can bring real-time support, customization, and education in ways that glossy enrollment booklets and quarterly statements never could.
But—and this is a big but—this only works if sponsors and providers deploy these tools intentionally. You can’t just slap a chatbot on your website and call it innovation. You need
AI that’s transparent, secure, and designed with participant outcomes in mind—not just provider marketing goals.
And here’s the kicker: plan sponsors aren’t just hoping for this evolution—they’re expecting their providers to lead it. The message from employers is clear: bring us smarter tools, better engagement, and stronger defenses. That’s the new value proposition. It’s not about who can shave 5 bps off the recordkeeping fee anymore, it’s about who can keep participant data safe while improving their retirement readiness with cutting-edge technology.
So, to my fellow plan providers: the winds have shifted. If you’re still selling solely on cost, you’re playing yesterday’s game. Sponsors want more. They need more. And if you can deliver AI-driven personalization while locking down cybersecurity, then you’re not just a provider, you’re a partner for the next generation of retirement plans.
And to plan sponsors: it’s OK to still care about costs. But don’t lose sight of the new battlefield. In a world of ransomware, phishing, and deepfakes, protecting participant data is fiduciary prudence. And embracing technology, carefully and strategically, is how you turn your plan from a checkbox into a real benefit.
Welcome to the new frontier. It’s not just about saving money, it’s about protecting it, growing it, and educating your participants every step of the way.
