Seven in 10 plan sponsors (70%) report they are “highly satisfied” with their 401k plan providers according to a new study released July 1 from Cogent Syndicated. Yet only seven providers total achieved satisfaction marks above the industry average.
According to Retirement Planscape, an annual Cogent Syndicated study from human behavior and analytics firm Escalent, Bank of America and MassMutual Retirement were the top firms for “Overall DC Plan Provider Satisfaction” among the top 15 firms eligible to be rated, followed in order by Charles Schwab, John Hancock Retirement Plan Services, Merrill/Merrill Edge, Fidelity Investments and T. Rowe Price.
As plan sponsors rely even more heavily on their plan providers as they adjust to massive changes in staffing and assisting remaining employees with short-term financial stress in the wake of the COVID-19 pandemic, service and support becomes the most influential driver of satisfaction and loyalty in the DC plan market.
“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.”
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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.
The report says 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 401k 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.”
Retirement Planscape assesses the plan sponsor market by identifying strengths and weaknesses in brand, loyalty and key experience metrics. The report explores what plan sponsors consider when switching or choosing a new provider.
It also examines the use and perceptions of DC investment managers from the perspective of investment decision-makers from organizations offering 401ks.
New this year, the report tackles plan sponsors’ greatest fears from cybersecurity threats and the steps they are taking to combat 401(k) plan leakage; the precise metrics plan sponsors use to evaluate the success of 401ks and financial wellness programs; and trends in plan design spanning HSAs, 401k student loan matching and MEPs/PEPs.