Charles Schwab, Bank of America and Fidelity Investments topped the respective large-, medium- and small-sized 401k plan participant satisfaction rankings of providers in a new J.D. Power study.
The J.D. Power 2019 U.S. Retirement Plan Participant Satisfaction Study ranked Charles Schwab highest in group retirement plan satisfaction in the large plan segment, with a score of 821. Nationwide (811) ranks second and Bank of America (809) third. The average for large plans in the study was 773.
Schwab also topped the large plan rankings last year in J.D. Power’s first retirement plan participant satisfaction study.
In the medium-sized plan segment, Bank of America ranks highest, with a score of 836. Fidelity Investments (814) ranks second and Nationwide (813) third. The average for medium-sized plans in the study was 763.
In the small plan segment, Fidelity Investments ranks highest, barely topping Nationwide by a point with a score of 790. John Hancock Retirement Plan Services (745) ranks third. The average for small plans in the study was 730.
Top 10 Large Plan Provider Rankings
- Charles Schwab (821)
- Nationwide (811)
- Bank of America (809)
- T. Rowe Price (800)
- Vanguard (795)
- Fidelity Investments (786)
- Prudential Financial (777)
- TIAA (760)
- Empower Retirement (750)
- Voya Financial (749)
Top 10 Medium Plan Provider Rankings
- Bank of America (836)
- Fidelity Investments (814)
- Nationwide (813)
- Vanguard (780)
- Prudential Financial (776)
- TIAA (769)
- Lincoln Financial Group (767)
- John Hancock (764)
- MassMutual (748)
- Voya Financial (746)
Top 10 Small Plan Provider Rankings
- Fidelity Investments (790)
- Nationwide (789)
- John Hancock (745)
- MassMutual (743)
- Principal Financial Group (743)
- Transamerica (736)
- ADP Retirement Services (726)
- Voya Financial (722)
- American Funds (716)
- Empower Retirement (697)
Crisis of confidence
The study also called out a “crisis of confidence” among U.S. 401k plan participants, showing fewer than one in five plan participants feel “very confident” in their retirement preparedness.
The study found just 17% of plan participants say they feel “very confident” in their retirement preparedness. That number falls to 15% among Boomers1, who are currently entering retirement at a rate of roughly 10,000 per day.
To build that confidence, J.D. Power says retirement plan providers need to rethink their approach when it comes to both digital tools and human advisors.
“Understanding the drivers of confidence is critical for retirement plan providers because it’s directly linked to roll-in and rollover decisions,” said Mike Foy, Senior Director of Wealth Management Intelligence at J.D. Power.
“Put simply, when retirement plan participants feel confident about their retirement, they are much more likely to bring assets to their primary plan from other sources, and to keep those assets with the provider after leaving their current job,” Foy said. “To build that confidence, providers need to deliver an effective combination of high-quality human interaction, useful online tools and thoughtfully designed digital self-service options.”
More key findings
Following are some of the other key findings of the 2019 study:
- Building confidence can pay off: Overall satisfaction with retirement plan providers is nearly 220 points higher (on a 1,000-point scale) when plan participants are “very confident” in a majority of the 11 areas related to retirement measured in the study vs. those who are “not confident at all” in at least one area. The percentage of participants who say they “definitely will” keep assets with their provider (either in the plan or a rollover) after leaving their job (46%) and have rolled in assets to their primary firm (47%) is highest when participants identify as “very confident” in a majority of areas.
- More robust mobile engagement is critical: Most retirement plan participants use a combination of website, mobile and phone channels to interact with their plan providers, but when awareness and/or usage of mobile capabilities are limited, providers are missing an opportunity to both increase participant satisfaction and reduce dependency on more expensive service channels. Satisfaction increases dramatically among participants who actively use the mobile channel, not only for reviewing information but for transaction and communication.
- Retirement plan providers must deliver a great digital experience but can’t ignore human interaction: Retirement plan participants have the highest levels of overall satisfaction (877) and confidence in a majority of areas (46%) when they are actively engaged with their retirement plan provider across multiple channels, including online retirement tools, digital self-service options and professional advisors.
The U.S. Retirement Plan Participant Satisfaction Study, now in its second year, evaluates participant satisfaction with providers of group retirement plans, such as 401ks, based on six factors: interaction across live and digital channels; investment and service offerings; fees and expenses; plan features; information resources; and communications.
Plan providers are ranked in three categories based on their overall mix of business in terms of average plan size. The study is based on responses of 8,332 retirement plan participants and was fielded in February-March 2019.
For more information about the U.S. Retirement Plan Participant Satisfaction Study, visit https://www.jdpower.com/business/resource/us-group-retirement-satisfaction-study.
1J.D. Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); and Gen Z (1995-2004). Millennials (1982-1994) are a subset of Gen Y.
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
