In the world of retirement plans, we’re comfortable with spreadsheets, deferral limits, matching formulas, and the usual fiduciary checklists. But let me tell you: we’re entering a territory where you may not be fully in control—and that territory is powered by artificial intelligence. The article from 401(k) Specialist titled “AI Tech to Spot Fiduciary Risks in Coming Years” is a timely wake-up.
1. What We’re Seeing
· Plan sponsors are increasingly leveraging AI for compliance, fraud detection, and operational monitoring.
· Simultaneously, the new capabilities raise fiduciary questions: Who is responsible when the algorithm errs? How transparent are the systems? What if the tech creates a false sense of security?
· The article warns that fiduciary exposure isn’t limited to traditional errors anymore—it now includes tech-driven blind spots.
2. Why Fiduciaries Can’t Just “Let the Machine Handle It”
Here’s friend-to-friend advice (in true Ary fashion): AI doesn’t relieve you of your fiduciary duty—it redistributes the risk.
· Liability still attaches: If your plan operations rely on AI for monitors, fraud detection, allocations, etc., but you don’t understand how the AI decision-process works or fail to oversee it, you’re still the fiduciary on the hook.
· Black-box concerns: If the system flags “anomaly” and you act (or fail to act) based on that, you need to ask: What rules is the AI using? How is it trained? What are false-positive/negative rates? A machine could miss an error or generate a bogus alert, and you’d still have to explain to the board why you ignored—or blindly followed—it.
· Vendor oversight is magnified: Your service providers may bring AI tools, but these do not excuse your oversight. Are they acting ministerially or discretionarily? Are you clear on the scope? If not, you’re exposed.
· Cyber/security risk escalated: AI features open new vectors: data-driven fraud, deep-fake impersonations, algorithm manipulation. A plan that hasn’t adapted its cybersecurity or vendor auditing processes will likely be the plan that ends up in the headlines.
3. What the Rosenbaum Fiduciary Checklist Looks Like (For AI Era)
Because yes, I have a list.
· Inventory all AI-enabled systems: Which parts of your plan operations use AI? Fraud detection? Participant communication? Investment monitoring? Know the “what” and “how.”
· Understand the logic & limitations: Get vendor documentation. Ask for audit trails. Are there human checks after algorithmic decisions? What is the “fail-safe”?
· Clarify roles and responsibilities: Who is the decision-maker when AI raises an alert? The vendor? The recordkeeper? You? Make sure your plan document, vendor agreement, and committee charter reflect this.
· Review cybersecurity and data governance: AI is only as good (and as safe) as the data and systems behind it. Review encryption, access controls, vendor controls, incident-response plans, and deep-fake risk protocols.
· Training and documentation: Your fiduciary committee needs to understand how AI fits in. Document decisions where you followed or rejected AI-generated outputs. Demonstrate oversight.
· Insurance and coverage review: Does your fiduciary liability insurance cover technology-enabled fraud or algorithmic failure? If not, revisit coverage.
· Plan design/operation check-up: Ensure that your reliance on technology isn’t replacing sound operational fundamentals. AI is not a substitute for clean plan design, solid vendor management, participant education, or good governance.
4. Final Word
Let me be blunt: if you think AI is just a “nice to have,” you’re one step behind. If you think, “Well, our vendor handles all that,” you might be dangerously complacent. In the AI era of fiduciary oversight, you remain the captain of the ship. The machine is a tool—but you still navigate.
So yes, embrace the smart tools. Use them to spot risks that humans might miss. But don’t outsource your fiduciary brain. Because when something goes sideways—and it will—the board isn’t asking the algorithm to explain itself. They’re asking you.
If you’d like, I can pull together an AI-readiness memo for your fiduciary committee (Ary style) that outlines the risks, the controls, and stops your plan from being a headline.
