What drives plan sponsor satisfaction with retirement plan recordkeepers? According to the latest PLANSPONSOR Defined Contribution (DC) Survey, such satisfaction stems from having the staff and processes in place to help simplify their job as a plan sponsor and to keep the retirement plan in compliance.
Plan sponsors want their recordkeeper to support them in their administrator role. According to Brian O’Keefe, director of research and surveys for PLANSPONSOR, in Boston, and manager of the DC Survey for the past six years, “Account/service teams and services related to federal/regulatory requirements are the No. 1 and No. 2 highest areas of satisfaction in this year’s survey and have become the basic ‘blocking and tackling’ that sponsors have now come to expect.”
Five years ago, services related to “legislative/regulatory updates” were in the bottom half of all ratings, notes Tim Rouse, executive director of The SPARK Institute, in Simsbury, Connecticut. “It was five years ago that most regulatory burdens fell on the plan sponsor, such as the 403(b) changes and fee disclosure. If the recordkeeper did not help the plan sponsor at the time, or did not help as effectively as the sponsor wanted, [that provider] was most likely scored poorly for it. Recent regulatory changes are more operational and are directed toward the recordkeepers themselves and mainly leave the plan sponsor out of it, which may explain the high score,” he says.
According to survey results, while plan sponsors would like better technology, DC providers have been slow to respond, as satisfaction with participant websites and online savings tools dropped again this year, continuing a five-year trend. “This may be another example of expectations changing faster than the industry,” says O’Keefe.
Andrew Way, senior analyst, retirement, at Corporate Insight in New York City, believes services are at varying levels of sophistication, digitally. “Over the course of the last two years, recordkeepers have begun to close the gap between their digital experiences and the experiences customers have come to expect from financial institutions thanks to their bank accounts, credit card accounts and brokerage accounts,” he says.
Digital account access and apps have become mainstream for many consumer banking products, but that has not always translated to retirement plans. There may be a fine line between allowing participants access to information and making transactions available on their smartphones or tablets, Way says, but recordkeepers also should keep in mind that many people now bypass desktop computers in favor of mobile devices.
Way says, about half of the top 20 firms by assets under administration listed in the 2016 PLANSPONSOR Recordkeeping Survey allow transactions via a mobile app; however 16 of the 20 enable transactions on a phone app, a mobile app or a mobile site; some allow transactions on both. Fidelity, Principal, T. Rowe Price, TIAA, Transamerica, Valic, Vanguard and Wells Fargo offer both a phone app and a mobile site. Other firms are a bit outdated, technology-wise, but still provide a mobile access point to at least view key account data, he says.
Participant and Plan Analytics/Health Tools
Plan health reports and plan analytics are now supplied by most recordkeepers, though what those reports consist of has yet to be standardized. Analytic tools can be very useful, but, from Rouse’s experience, some issues exist. “Only if you have measured goals to give you context, then plan analytics can tell you how you’re doing against those goals. Are we on track? Are we falling behind?”
Way points to another ready source of data—plan sponsors’ reporting sites. “[It’s] a pretty complex tool,” he says. “If you know how to use it right, you can get anything out of it, but usability is very poor.”
Still, he says, the use of such tools is on the rise. Some plan sponsors do an especially good job of pulling data from the tools the participants use. The participant gets an understanding of his level of readiness; the site tool gives him a projection of monthly retirement income based on current scenarios—it allows participants to model various inputs for projections.
The plan sponsor side has a similar tool and receives data on participants’ engagement and readiness, Way continues, noting that when the plan sponsor logs on, he sees the plan’s overall health. The data is often presented as infographics and is clickable. It shows the number of participants on track for retirement, how many are not, and how many are not enrolled, for instance. Clicking down further reveals more detailed information.
An area of continued development is benchmarking to show plan sponsors how their plan compares with others—e.g., in their industry, in companies of similar size, or in their same geographic area. “Recordkeepers are starting to build out how a company’s plans stack up in these ways,” Rouse says.
When asked, Rouse says these benchmarking services are not a new expectation, but it is one still unsatisfied. “I’ve been hearing about this for years, and only now recordkeepers are beginning to provide this.” In some cases, recordkeepers may not have a large enough population to do comparisons. But there are other ways they are able to build out comparison tools.” One is to look at other plans’ filed 5500 forms, he says.
Service team satisfaction always scored high in past surveys, yet, over the past five years, satisfaction with service team knowledge and staff turnover have somewhat eroded; satisfaction with responsiveness has remained stronger. O’Keefe says, “Perhaps such factors are correlated to economic factors: When unemployment rates are declining, as they have been over the past five years, employee turnover likely increases and thus strains the knowledge on service teams.”
Rouse is not at all surprised by the service team satisfaction outcomes. “Turnover at the relationship manager level is felt immediately, and it’s an area many recordkeepers are very sensitive to. Plan sponsors have said repeatedly, across different companies, that senior management changing impacts them much less than when the service team is changing.
This is because the service team is whom they work with every day. There is a familiarity and comfort level, and when they change, it’s a big dissatisfaction point,” he says.
Fees and investments are two areas where current service offerings appear to have reached equilibrium with expectations. Although the industry continues to focus on fees, that has not kept sponsor satisfaction from dipping slightly, however not enough to raise alarm. Similarly, investment offerings are largely satisfying, as sponsors report high levels of satisfaction with the fund families, fund classes and share types available to them.