How AI, FinTech Solutions Aim to Enhance Financial Security, Retirement Savings

Whether it’s preventing fraud activity, providing student loan debt assistance, helping participants with the decumulation phase of retirement or making advisers more efficient at work, speakers at the Employee Benefit Research Institute-Milken Institute 2024 Retirement Symposium on Tuesday touted the value of technology and artificial intelligence when it comes to improving financial outcomes for plan participants

The entrepreneurs on the panel discussed how their various product platforms and services leverage technology to help specific demographic groups of employees—from pre-retirees and retirees dealing with fraud risk and high health care costs to people struggling with student debt. 

Kevin Nazemi, founder and CEO of Charlie Financial, a financial services company for retirees, said his company uses AI to prevent retirees from experiencing fraudulent activity. 

“If you take a typical retiree, they’re going to fill up their gas tank less on a regular basis than your typical working American, they’re going to eat out a little earlier than the typical American,” Nazemi said. “We take that information along with behavior signals that exist oftentimes when a transaction takes place … to prevent [fraud] from happening.” 

Nazemi explained that Charlie FraudShield, a comprehensive set of personalized fraud prevention services built exclusively for those aged 62 and older, analyzes how quickly information is typed into a device when it is used to make a transaction, as well as the location of the transaction, to figure out if the transaction matches up with the activity of the legitimate customer.  

AARP reported that seniors lost more than $28 billion to fraud last year, and Nazemi said a lot of fraud is not even reported. While AI and technology are being used to enable fraudulent activity, such as by impersonating a retiree’s grandchild or impersonating their voice, Nazemi said the same tools present an opportunity to combat fraud.  

When fraudulent activity is detected through the Charlie platform, for example, the banking service will implement a “speedbump,” which will slow the transaction down. Based on the attributes of that transaction, a Charlie representative will guide the customer through best practices to confirm whether that transaction is fraudulent or not.  

AI and Decumulation 

Tyler End, CEO of Retirable, a decumulation platform that works to deliver income certainty to “mass market seniors,” agreed with Nazemi that the fraud risk to seniors is “astronomical.”  

In addition to providing a financial planning service with “real humans on the phones,” End said the company focuses on reducing financial planning servicing costs for users, as the platform deals with clients with smaller accounts, which he said enables financial planners to be as efficient as possible when working with those clients. He said Retirable also analyzes users’ spending habits on things such as health care to estimate the income they will need in retirement.   

“I think the things that get us very excited, beyond the servicing cost reduction, that we’re able to leverage with our existing clients is building in all of the spending data that we now have on clients and health care claim data,” End said. “If we can be smarter about when we expect expenses to flow through on the health care side and have a deeper understanding of where clients are spending their money, how they’re spending it [and] where the opportunities are for decreasing [their spending], we can enable much smarter financial planning and investing decisions, which is at the core of everything we do.” 

Leveraging Technology to Reduce Student Loan Debt 

Laurel Taylor, founder and CEO of student debt solution Candidly, said that platform uses AI to calculate how much federal loan forgiveness a plan participant might be eligible for based on payroll and recordkeeping data. The platform also continuously evaluates users’ financial health and pairs that with expert guidance and content to create a personalized financial plan.  

According to MIT Age Lab and TIAA, 80% of people with student debt prioritize paying down student loans first and saving for retirement later, and Taylor said the student loan matching provision outlined in the SECURE 2.0 Act of 2022, along with services like Candidly, aim to help people pay down their debt and save for the future simultaneously.  

“The number one stressor in the workplace today is the [federal] student loan payments that [are] due now,” Taylor said. “What we’re hearing from users at scale, regardless [of] if they make $150,000 a year or $17,000 a year, is, ‘I’m going to withdraw from my 401(k)’ [or], ‘I’m not going to participate in my 401(k).’” 

Helping Advisers 

Yon Perullo, CEO of RiXtrema Inc., explained that his technology firm focuses on using AI to help advisers grow their practices. Perullo said the platform uses large language models to help advisers reach out to their plan sponsor prospects. He explained that RiXtrema has trained its models to understand concepts like SECURE 2.0, individual retirement plans and lawsuits that have occurred within the industry.  

“On one side, we have models that do portfolio risk management around a financial portfolio,” Perullo said. “On the other side, we have models that help, translate, summarize and do things that can really make things more efficient. … I think when we talk about our use of AI, it’s really about efficiency and getting … all advisers to use their time efficiently, because what I’ve learned about advisers is that [they] don’t have a lot of time to do a lot of different things in [their] days, so if we can help save some time, that’s one of the things that we really focus on.” 

Perullo pointed out that “AI washing”—to make products appear to include an AI component—is becoming more common, as some companies are putting an “AI label” on everything. 

“I think that’s a big risk,” Perullo said. “You really have to understand what the AI technology is benefiting. Is it helpful? Is it worth paying for it? Is it saving you time? Is it giving your clients a benefit? … Is it preventing fraud? How does it keep your clients’ data safe? There’s a lot of things that people don’t understand yet.”