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Mobile Apps Emerge as a Critical Tool for Retirement Plan Providers

Practice Management

Amid ongoing market volatility, it’s little wonder that plan participants are keeping a close eye on their retirement account balances, and they increasingly are doing so via mobile apps. 

As a result, mobile apps have taken center stage as critical tool for retirement investors, according to J.D. Power’s 2023 U.S. Retirement Plan Digital Experience Study released Sept. 13. 

And while improved market performance has helped lift overall satisfaction with retirement plan digital tools, for firms that want to differentiate and increase customer satisfaction—whether in good markets or bad—more work needs to be done on the digital front, especially when it comes to mobile apps. 

“The good news is that overall satisfaction with the retirement plan digital experience is up considerably this year, but when we compare those scores to similar customer-facing industries such as wealth management, property and casualty insurance and automotive, it’s clear that retirement plans still have a lot of opportunities to improve their digital offerings,” explains Craig Martin, managing director and global head of wealth and lending intelligence at J.D. Power. 

To that end, Martin notes that they’re finding that improved digital experiences are critical to strong financial performance. “Participants who have a great digital experience vote with their dollars, with roughly double the amount of participants rolling in assets from other plans and more than triple the amount saying they will keep their money with their current provider if their job situation were to change,” he says. 

Martin adds that the effects of the digital experience to plan providers will only become more important when an inevitable market downturn occurs, and satisfaction is affected.

As to the study’s key findings, J.D. Power reports that overall satisfaction with retirement plan digital experiences increased to 685 this year (on a 1,000-point scale), which is a 22-point increase from 2022. 

What’s more, retirement plan mobile apps have shown substantial increases in adoption and continue to drive higher levels of satisfaction when they are used. Nearly half (47%) of participants have downloaded their retirement plan’s mobile app, up from 35% in 2021, and 38% have used the mobile app in the past 30 days, up from 27% in 2021. 

Overall satisfaction with retirement plan mobile apps is 728, which is 38 points higher than for mobile websites and 72 points higher than for desktop websites.

Stronger Bottom Lines

The study further observes that strong digital experiences drive strong bottom lines. More than a third (34%) of retirement plan participants who give their provider the highest marks for their digital experience have rolled over money from other retirement accounts, compared with just 20% among clients who give their retirement plans poor ratings on their digital experience. 

Likewise, the percentage of participants who say they “definitely will” keep assets with their current provider in the event of a job change is 48% among those giving their retirement plans the highest ratings for digital, which compares with just 15% among those with low digital satisfaction.

When it comes to overall ratings, however, just 38% of retirement plan participants give their plans high marks for their digital capabilities. J.D. Power observes that overall satisfaction lags significantly behind other industries it conducts studies for, such as wealth management (701), property and casualty insurance (702) and automotive (718).

“The digital playbook for retirement firms could not be any clearer,” says Jonathan Sundberg, director, digital solutions at J.D. Power. “More clients than ever are interacting with their brands via mobile apps, and when they do, virtually every mark of customer engagement, retention and asset acquisition increases.

“Right now, a handful of standout firms are really delivering well when it comes to the mobile digital experience, but many more still have a great deal of work to do to get to the level of experience participants expect based on their interactions in other industries,” adds Sundberg. 

As to the study rankings, Capital Group/American Funds ranked highest in retirement plan digital satisfaction, with a score of 753, followed by Charles Schwab (746) and Bank of America (including Merrill) (715). Rounding out the top five were Vanguard (708) and Fidelity Investments (707). 

The study, formerly known as the U.S. Retirement Plan Participant Satisfaction Study, measures customer satisfaction across four factors: information/content; navigation; speed; and visual appeal. It is based on the responses of 5,804 retirement plan participants and was fielded in May-June 2023.