While some standout performers (named below) are setting themselves apart from the pack, the majority of retirement plan providers are failing to deliver proactive guidance to 401k participants and many have made it difficult to find the information users are seeking on their websites and mobile apps.
That’s a key takeaway from the J.D. Power 2021 U.S. Retirement Plan Digital Satisfaction Study, released today. Just 24% of retirement investors strongly agree their provider offers proactive guidance and help, and just 43% found it very easy to locate the information they were looking for on their retirement plan websites and mobile apps.
The U.S. Retirement Plan Digital Satisfaction Study, formerly known as the U.S. Retirement Plan Participant Satisfaction Study, was significantly redesigned this year to focus on investor interaction with retirement plan digital channels. Satisfaction scores are measured across four factors: information/content; navigation; speed; and visual appeal. The study is based on responses of 5,363 retirement plan participants and was fielded in May-June 2021.
“Very often an individual’s first experience with investing happens within an employer-sponsored plan, giving these plan providers an inside track to build a relationship and retain and grow the participant’s assets long after they have separated from their current employer,” said Mike Foy, senior director of wealth management intelligence at J.D. Power. “Many of these providers have invested significantly in developing digital content and tools to provide education and guidance, but if participants are unaware of those resources or can’t easily find or use them, it’s a huge missed opportunity.”
Schwab stays atop study rankings
The new J.D. Power study found Charles Schwab ranks highest in 401k plan participant digital satisfaction with a score of 725. Bank of America (formerly Merrill) ranks second with a score of 703 and AIG Retirement Services ranks third with a score of 699.
The top and lowest performers in this study are separated by nearly 100 points on a 1,000-point scale, setting the stage for a new battle for retiree hearts and minds that is taking place in digital, as virtually every 401k participant interaction has shifted to digital channels. The industry average score was 675 while the lowest-ranked provider in the survey came in at 633.
Notably, Charles Schwab and Bank of America tied atop the large plan rankings in last year’s J.D. Power survey, before it was redesigned to focus on digital channels. Charles Schwab also ranked highest in group retirement plan satisfaction in the large plan segment in the 2019 and 2018 surveys.
More key findings
- Proactive guidance key to customer engagement, but few retirement plans deliver: Net Promoter Scores significantly increase by 51 points among participants when their retirement plan provides proactive guidance via digital channels. Participants who receive this guidance are also 25 percentage points more likely to keep their retirement assets with their current retirement plan provider or roll over to a separate IRA with that provider. Despite these benefits, just 24% of retirement plan investors say they strongly agree that their retirement plan provider offers proactive guidance and help.
- Apps are key: Overall satisfaction with the mobile app experience is 69 points higher than for websites, yet only 35% of participants have downloaded their retirement plan provider’s app to their phone. By comparison, 52% of utility residential customers have downloaded their energy provider’s app.
- Guidance and overall financial health: Retirement planning and savings can’t be done effectively in isolation from a participant’s other short- and long-term financial goals and needs. While slightly more than half (58%) of plan participants are generally financial healthy, among those who are not— including the overextended, stressed and vulnerable—satisfaction scores are much lower for the value of the information and content provided. Providers need to do a better job of understanding participant needs and delivering more relevant digital content.
Click here for more information about the U.S. Retirement Plan Digital Satisfaction Study.
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