A new report from financial intelligence and consulting firm Corporate Insight suggests the plan sponsor’s duty to analyze its participants’ online experience is critically important in the modern defined contribution (DC) retirement planning context. The research argues that shortcomings in participant websites should be a compelling case for switching service providers or demanding more from existing provider relationships, especially as younger generations of participants expect more of the 401(k) account management experience to be delivered online.

Drew Maresca, a senior analyst at Corporate Insight who helped develop the report, “Engaging Participants: Best Practices for Plan Sponsors,” tells PLANSPONSOR the competitive landscape among defined contribution service providers has become vastly more complex in recent years. Not only have the various data tools and transaction resources offered online to participants become more sophisticated—there has also been a move among the leading providers to make Web-based processes simpler and accessible across a variety of electronic devices. 

This has resulted in a new set of best practices that plan officials must consider when analyzing participant Web offerings, he says, adding that sponsors are often surprised to see how their Web offerings differ from other plans with similar size and expense characteristics. 

Maresca describes a good participant website as one that features robust income calculators, data visualization tools and a full-service account management platform through which participants can easily initiate change in their savings rates and investment portfolios. It is also important, he says, for this information to be presented with compelling educational materials and next-best-step education that can guide participants through actual financial planning decisions, such as when to start drawing Social Security or what asset allocation is best.

“One distinguishing feature of the top websites is the convenience factor,” he says. “It’s becoming more important to make interacting with your plan easier and to make the participants’ financial lives simpler to manage, whether online or through in-person meetings. The data shows convenience online can lead to better outcomes.”

Corporate Insight has been auditing DC service provider websites since 2006, Maresca explains, and refocused the effort in 2012 with the launch of the Retirement Plan Monitor, which tracks the online participant experiences offered by 17 large defined contribution plan service providers.

“In that time we’ve seen that the digital experience of participants varies greatly depending on the capabilities of the provider, so much so that it leads to vastly dissimilar participant experiences in plans that would otherwise look a lot alike,” he says. “Even in our list of the largest DC providers, we see a lot of disparity in the online offerings. Some do much better than others, to be frank.”

There are websites that are very communicative and go the extra mile in terms of online training and supporting investors at all levels, especially the novice investors, Maresca says. Other sites just present the bare-bones information, the account balance and the investment options without teaching the participant about how to set savings goals or how to optimize investment performance based off personalized age, health, wealth and salary considerations. These are the features sponsors should be demanding, Maresca says.

For guidance on assessing current and prospective Web offerings, Maresca says, sponsors and consulting resources should ask themselves, “Does our website promote or hinder participant engagement?” There will always be a wide spectrum of persons with varying degrees of financial acumen and interest within a given plan, he says, so answering this question won’t be easy without robust plan demographic data and a good understanding of the goals and aspirations of participants.

Additionally, plan officials must consider ease of use and whether their website promotes holistic financial wellness. Both are important characteristics that a defined contribution plan’s participant website must have in order to improve outcomes, he says. Participants should be able to take corrective action easily, if necessary. Presenting retirement scenarios in a graphical way is another best practice, to engage participants, he says.

Maresca pushes back against the notion that robust Web resources may be prohibitively expensive to develop and maintain among smaller plans or those with few extra resources.

“I think both low fees and powerful Web resources can be a part of the same plan,” Maresca says. “There is no reason why you can’t work with your service provider to at least explore the steps it would take to streamline and improve the Web offerings. I don’t think it’s as challenging as one might expect to start moving in the right direction.”

A summary of the report, as well as information on how to purchase the full results, is available here.