An organization of retirement industry luminaries like Shlomo Benartzi, Warren Cormier and Lindsay Owens is out with its annual study of participant trust and engagement.
The National Association of Retirement Plan Participants, an organization that makes “financial information transparent and universally accessible for the 145 million working Americans,” finds for the second year in a row, participants’ level of trust in their plan provider is holding steady at 30 percent, an all-time high in this study.
At the same time, however, generalized trust in financial institutions has dropped from 13% in 2018 to 11% in 2019.
Participants’ level of trust in their employer is also trending downward from 27% in 2017 to 25% in 2019.
Despite the relatively high level of trust in one’s own provider, the data show a significant downward trend in overall satisfaction with providers, which has seen a decline over the past six years, from 41% in 2014, down to 31% in 2019.
The experience that the average participant is having with their retirement provider is coming up short in important ways: only 43% are satisfied with education services provided by their provider and participant engagement is decreasing across all channels of website usage, tools, etc.
Participants are feeling less confident in their ability to make good financial decisions—18% feel comfortable planning for retirement and 42% feel knowledgeable about finances. At the same time, financial stress is high at 49%, with Millennials feeling the most stress at 60%.
The data show that participants are interested in improving their personal finances—33% have tried to reduce debt and make a budget.
Contributors to financial stress
- Student debt: Roughly half of Millennials have student debt (the median amount is $27,000)
- Financial support for parents: 32% of Millennials have given financial support to a parent over the past year
- Financial support for adult child: 33% of Boomers have given financial support to an adult child over the past year
The study profiles 16 leading retirement plan providers on trust and the factors that build trust.
Most trusted providers
- Charles Schwab and Vanguard (tied)
- Nationwide
- T. Rowe Price
- Fidelity
- Alight, TIAA and Prudential (tied)
Other key findings include:
- Trust in financial advisors: 16%.
- Fee transparency is a key driver of trust—and 55% of participants don’t know how much they are paying in fees.
- Gender engagement gap: There are significant differences in attitudes about financial matters and engagement between men and women.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
