Vanguard logos, old and new

Vanguard is poised to be at the forefront of the financial services business once again — this time “disrupting” the retirement industry, writes Amber Czonstka, a principal in the firm’s institutional sales, in a recent blog.

The retirement industry, she notes, has many of the “same puzzle pieces” as the financial services business, specifically being “tethered” to legacy mainframe systems, which makes it difficult for plan administrators to “fully capitalize on real-time enhancements in the same way that fintech companies can.”

Czonstka equates trying to make changes to that system like trying to create “a new state-of-the-art app on a flip phone.”

However, other industries that have been disrupted have found out it usually takes an outsider to change it, and in this regard, she says Vanguard “is blazing a unique trail.”

The fund behemoth has partnered with “digital disrupter” Infosys, Czonstka points out, and aims to pair its “prowess in plan design, participant behavior, and participant advice with Infosys’ track record of using technology to create leading-edge, customer-centric experiences.”

See: Vanguard Abandoning Ship Developing New Brand Image

What does this mean? Right now, advisors and their clients might not see it, but changes are coming, according to Czonstka, and here’s how:

1. Future-Proof Foundation

This largely means by going “cloud-native” and building a new platform from the ground up that will allow advances to be added without having to adapt the entire system (think: decoupling from legacy systems).

“We’ll also learn and implement customer experience enhancements that are happening in other industries that Infosys works with,” she writes.

This means integrating the application programing interface (API)  service into the web experience, which gives plan sponsors the ability to “create custom plan management tools, integrate third-party services and share plan data with consultants,” according to the Vanguard executive.

2. Next-Level Hyper-Relevance

This change also will let participants have “deeply-personal, cohesive experiences” and allow investors to pay down debt, create emergency savings or buy a house, she says.

In addition, according to Czonstka, the digital experience will “adapt to participant preference, including imagery, language and navigation.”

3. Stronger, Faster Insight

Perhaps most cutting edge will be Vanguard’s partnership with Infosys.

Through it, the asset manager is expected to implement Genome, which can “decode what we’re calling a client’s financial DNA and help us guide them in the right direction. We can construct behavior models in real time based on each participant’s action and collect individual participant sentiment,” she explains.

What’s the likely impact from this development? Plan sponsors will be able to use these analytics to collect a “real-time ‘pulse’” on participants’ attitudes about financial health and retirement to help the retirement business to better adapt to client needs, according to Czonstka.

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