Slow rise in retirement plan digitalization

Despite its low ranking, J.D. Power found that overall satisfaction with retirement plan digital experiences grew to 703, an 18-point increase from 2023.

However, it’s position is still poor compared to other service industries—including insurance, automative finance, utilities, and banking—when considering ease of use and ability to find information. Other critical gaps including ease of finding information, tools, and other usage challenges, J.D. Power reports.

Martin explains his reasoning on why the retirement planning industry falls behind in digitalization, compared to resembling industries like insurance and banking. One factor is the prioritization these industries have made to enable technology early on, he highlights in comments to 401(k) Specialist.  

“Banks and insurers were early in making substantial investments in technology in part because of the highly competitive nature of the industry,” he said. “Retirement firms have started to increase their investments in technology but there is a meaningful difference still.  Related to that, large financial institutions can often leverage learnings and best practices from other parts of the organization to help improve the experience across the enterprise.”

Another factor is the nature of the relationships between professionals and clients. Whereas individual clients seek out banking services themselves, employer-sponsored retirement plan participants work with financial planners chosen by their company. “Retirement relationships tend to have less activity and engagement when compared to something like banking,” he further explained. “Additionally, when talking about an employer-provided retirement plan, the end consumer doesn’t have direct decisionmaking power on who they work with so there is less market pressure created by competition.”