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Crisis of Confidence Seen Among Participants

Practice Management

To help alleviate a perceived crisis of confidence among participants, retirement plan providers should rethink their approach when it comes to both digital tools and human advisors, a new report suggests. 

According to J.D. Power’s 2019 U.S. Retirement Plan Participant Satisfaction Study, now in its second year, just 17% of plan participants say they feel “very confident” in their retirement preparedness. And that level drops to 15% among Baby Boomerswho are currently entering retirement. 

To build that confidence, Mike Foy, Senior Director of Wealth Management Intelligence at J.D. Power, explains that providers need to deliver an effective combination of high-quality human interaction, online tools and digital self-service options. “Understanding the drivers of confidence is critical for retirement plan providers because it’s directly linked to roll-in and rollover decisions,” he says. “Put simply, when retirement plan participants feel confident about their retirement, they are much more likely to bring assets to their primary plan from other sources, and to keep those assets with the provider after leaving their current job.”

To help evaluate the needs and expectations of today’s retirement account investor, the study measures customer satisfaction with 401(k) provider services, based on six factors: 

  • interaction across live and digital channels; 
  • investment and service offerings; 
  • fees and expenses; 
  • plan features; 
  • information resources; and 
  • communications.

The study notes that overall satisfaction with retirement plan providers is nearly 220 points higher (on a 1,000-point scale) when plan participants are “very confident” in a majority of the areas measured versus those who are “not confident at all” in at least one area. 

Moreover, the percentage of participants who say they “definitely will” keep assets with their provider – either in the plan or a rollover – after leaving their job (46%) and have rolled in assets to their primary firm (47%) is highest when participants identify as “very confident” in a majority of areas.

Digital Tools and Human Engagement

To that end, more robust mobile engagement is critical, J.D. Power suggests. “Most retirement plan participants use a combination of website, mobile and phone channels to interact with their plan providers, but when awareness and/or usage of mobile capabilities are limited, providers are missing an opportunity to both increase participant satisfaction and reduce dependency on more expensive service channels,” the study emphasizes. It notes that satisfaction increases dramatically among participants who actively use a mobile channel, not only for reviewing information but for transactions and communications.

And while retirement plan providers must deliver a great digital experience, they cannot ignore human interaction, the study further advises. It notes that retirement plan participants have the highest levels of overall satisfaction (877) and confidence in a majority of areas (46%) when they are actively engaged with their retirement plan provider across multiple channels, including online retirement tools, digital self-service options and professional advisors.

Study Rankings

As to how the various plan providers ranked, the report shows the participant satisfaction index for large, medium and small plan segments, based on a 1,000-point scale. Plan providers are ranked in these three categories based on their overall mix of business in terms of average plan size. The study is based on responses of 8,332 retirement plan participants and was fielded in February-March 2019. Below are the top five for each category. The numbers in parentheses are the firms’ participant satisfaction index scores.

Large Plans

  • Charles Schwab (821)
  • Nationwide (811) 
  • Bank of America (809) 
  • T. Rowe Price (800)
  • Vanguard (795)

Medium Plans

  • Bank of America (836)
  • Fidelity Investments (814)
  • Nationwide (813)
  • Vanguard (780)
  • Prudential Financial (776)

Small Plans

  • Fidelity Investments (790)
  • Nationwide (789)
  • John Hancock Retirement Plan Services (745)
  • MassMutual (743)
  • Principal Financial Group (743)