July 1st, 2020
Jul 1, 2020 - 401(k) plan sponsors are adjusting to massive changes in staffing and assisting remaining employees with short-term financial stress in the wake of the COVID-19 pandemic. All this on top of their traditional goals of ensuring retirement readiness and regulatory compliance. As plan sponsors rely even more heavily on their plan providers, service and support becomes the most influential driver of satisfaction and loyalty in the DC plan market. These and other findings are from Retirement Planscape®, an annual Cogent Syndicated™ study from Escalent, a top human behavior and analytics firm.
“Service and support is increasingly vital as plan sponsors strive to expand the financial guidance capabilities they offer to plan participants,” said Sonia Davis, senior product director at Escalent and author of the report. “This is a critical time for DC plan providers to reinforce—and ideally enhance—their client service offerings.”
According to the study, seven in ten plan sponsors (70%) are highly satisfied with their plan providers on average. Yet only seven providers achieve satisfaction marks above the industry average:
Top Firms for Overall DC Plan Provider Satisfaction (% Top 3-Box)
1. Bank of America – 89%
2. MassMutual Retirement – 89%*
3. Charles Schwab – 84%
4. John Hancock Retirement Plan Services – 81%
5. Merrill/Merrill Edge – 77%
6. Fidelity Investments – 76%
7. T. Rowe Price – 75%
* Ranked second due to rounding.
Base: plan sponsors using and rating the brand; rankings are among the top 15 firms eligible to be rated.
Source: Escalent. Cogent Syndicated. Retirement Planscape®. May 2020.
A more detailed analysis on the most critical driver of service and support reveals Merrill/Merrill Edge (which typically services DC plans with less than $20 million in assets) and Bank of America (which targets larger plans) are setting the bar with responsiveness of phone representatives—a particularly sensitive issue given recent market volatility. Charles Schwab also stands out, earning high satisfaction ratings for its participant website and online capabilities as well as its participant account statements. Meanwhile, MassMutual achieves industry-leading ratings for its plan sponsor website and participant educational materials.
“These industry leaders exhibit excellence in digital capabilities; distribution and rollover guidance; educational materials; and phone service reps, which are each a fundamental aspect of service and support,” said Linda York, senior vice president at Escalent. “The providers that demonstrate a sincere commitment to helping 401(k) plan sponsors and participants navigate this market environment will fortify client loyalty during a time in which new business opportunities may be temporarily on hold.”
About Retirement Planscape®
Cogent Syndicated, a division of Escalent, conducted an online survey of a representative cross section of 1,510 401(k) plan sponsors from February 25 to March 16, 2020. Survey participants were required to have shared or sole responsibility for plan design, administration or selection and evaluation of plan providers, or for evaluating and/or selecting investment managers/investment options for 401(k) plans. In determining the sampling frame for this study, Cogent relied upon recent Form 5500 filings as maintained by ALM’s Judy Diamond Associates. To ensure the population for this research is representative of the universe of 401(k) plan sponsors, quotas were set during the data collection phase around key firmographic variables including total plan assets, number of plan participants, industry and geography. Minimal weighting was applied to adjust for purposeful deviations from the actual marketplace distribution. The data have a margin of error of ±2.52% at the 95% confidence level. Escalent will supply the exact wording of any survey question upon request.