Plan Sponsors Report Greater Satisfaction with a Single Recordkeeper

New survey results find that 401(k) plan sponsors using a single recordkeeper to manage multiple retirement plans report better overall time savings and fewer administrative drawbacks than sponsors using multiple providers.  

Depending on the type of plan, sponsors using one recordkeeper were found to save from 17% to as much as 50% more time compared to those with multiple providers, according to survey results from Principal Financial Group.  

NMG Consulting conducted the survey on behalf of Principal among more than 300 plan sponsors with a DC plan and at least one other retirement plan, including a defined benefit plan, stock plan or a non-qualified deferred compensation (NQDC) plan. 

Time saving was highest when matching DC plans with DB plans (50%), followed by stock plan solutions (30%), and NQDC plans (17%). Those percentages equate to as many as 14 business days to at least four business days, Principal suggests. Meanwhile, 75% of plan sponsors with multiple providers believe they would save time by using one provider.

Satisfaction and Engagement

More sponsors with a single provider also cited higher participant satisfaction and retirement plan engagement. According to the findings, 73% of respondents with one recordkeeper put employee satisfaction with their retirement benefits as a top-three business outcome, compared with less than two-thirds (60%) with multiple providers. 

Similarly, nearly three-quarters (73%) of sponsors working with a single recordkeeper cite stronger employee engagement with their retirement benefits, more than peers working with more than one recordkeeper (62%). They also believe their employees have a better understanding of their retirement benefits.

Plan sponsors working with one provider also reported fewer touchpoints for participants to view or make changes to their retirement accounts. Here, the survey found that nearly three-quarters of plan sponsors using a single recordkeeper said they provide their employees with access to an end-to-end view of their retirement savings, compared to 58% with multiple recordkeepers.

Compared to plan sponsors with multiple recordkeepers, those with a single recordkeeper are slightly more likely to: 

• say their experience across plans is more consistent (93% vs. 88%);
• say plan compliance nondiscrimination testing and Form 5500 filing are more efficient (93% vs. 89%); and 
• have access to integrated reporting on plan performance metrics (86% vs. 80%).

In contrast, respondents with multiple providers cited administrative drawbacks to their retirement plan setup, including nearly half (46%) needing someone additional on staff to coordinate accounts.

Sponsors working with multiple recordkeepers also report that one of their biggest concerns about working with a single recordkeeper is because their plans have complex or specialized plan design provisions that require the expertise of a specialist recordkeeper and subject matter experts (SMEs). 

Yet, plan sponsors that work with a single recordkeeper report that they have access to those same capabilities. According to Principal’s findings, sponsors who work with a single recordkeeper: 

• were just as likely to report having access to deep subject matter expertise (72% vs. 74%); and
• were more likely (69%) to say they have access to specialized services for the unique provisions of their plan(s) than sponsors who work with multiple recordkeepers (61%).