Study Suggests Recordkeepers Not Helping Guide Participants

A combination of unprecedented market volatility and complex new rules involving contributions, withdrawals and tax implications has exposed an increased need for participant guidance and advice from retirement plan providers, notes J.D. Power.

Additionally, with record job losses in recent months, much of the money accumulated in these plans may potentially be lost if participants choose another provider for a rollover, it says. The J.D. Power 2020 U.S. Retirement Plan Participant Satisfaction Study suggests few providers are successfully addressing these issues.

Just 27% of the 10,159 retirement plan participants surveyed in February and March said they have accessed professional financial advice related to their plan. Nearly three in 10 (29%) were either unaware of whether such advice was available or perceived that it was not available to them.

Nearly one-fourth (22%) of retirement plan participants said they’ve had no interaction with their provider during the past 12 months. J.D. Power notes that frequency of interaction is directly correlated to participant satisfaction. Overall satisfaction scores increase 44 points (on a 1,000-point scale) when participants say they’ve had one to four interactions per year with their retirement plan provider.

In addition, proactive, personalized digital communications can have a positive effect on participant satisfaction with retirement plan providers, J.D. Power says. For example, communication satisfaction scores are 70 points higher when participants receive a personal communication via their retirement plan provider’s mobile app than when they receive a traditional email. However, just 15% of retirement plan participants surveyed reported receiving this type of digital communication.

Unemployment and employment turnover may drive a surge in rollover decisions during the year. According to the survey, among participants who indicated they are “delighted” with their retirement plan provider, 51% said they “definitely will” retain assets in their current plan. That percentage fell to just 12% when participants said they are “indifferent” about their provider and to 7% among those who said they are “dissatisfied.”

Nathan Voris, senior managing director, business strategy, Schwab Retirement Plan Services, based in Richfield, Ohio, says there are certainly resources available. “It is not our experience that participants are going it alone,” he tells PLANSPONSOR. “We try to create a balance of in-person, phone, web and mobile participant engagement. If a participant has a question, there are resources to get an answer, and if they can’t get it on their own, there’s a person available”

Voris says getting the right information to participants is a collaboration between plan sponsors, recordkeepers and advisers. “Some plan sponsors may want to just do recordkeeping, but largely we find our clients like a collaboration,” he says.

Vanguard likewise says it is “focused on providing advice solutions that give [retirement plan] savers a holistic view of their financial situation and help them make better-informed financial decisions, in partnership with plan sponsors.” It notes that it recently rolled out Digital Advisor, Vanguard’s robo advice solution, within select defined contribution (DC) plans, and has intentions to expand plan access to Digital Advisor and Personal Advisor Services in the future.

Fidelity provided stats from its participant base showing its engagement. Participants are reaching out to Fidelity via phone and web to get the help they need. There was a 25% increase in call volumes compared to March 2019, according to Fidelity Investments Call Volume Reporting from February 24 through March 31. There was a 15% increase in daily activity on its participant website, according to Fidelity Investments NetBenefits Website Reporting for the same period. And there was an 18% increase in visitors to the library and tools/calculators section of its participant website.

Fidelity has seen more than one million page views on its new COVID-19 participant hub, with 45% viewing additional resources on the site, according to Fidelity Investments Website Reporting from April 1 to May 8. In addition, Fidelity says 21,000 participants have attended its newest web workshops, and it saw record attendance for live web events with almost 8,000 attendees during the week of April 27.

Voris says Schwab is aware that participants who interact with the provider are happier than those who don’t. “If a participant receives education, a guidance session or advice consultation—even about things like how to request a distribution—it leads to greater satisfaction, and they will want to be a client for life,” he says.

He adds that during this “crazy time,” there are a lot of scenarios that would require participants to get help. “The resources are there. Participants just need to go to [the retirement plan] website or pick up the phone.”

From a business perspective, Voris says, “It is a stressful time, but it clarifies our mission of helping people achieve their goals. Times of crisis help us refocus.”