401(k) savers’ trust in their retirement plan providers has reached an all-time high, according to a recent study. And they’re feeling more confident about the way in which their 401(k) savings are being managed to boot.
Yet, overall, there’s still a long way to go.
In its 2018 Participant Trust and Engagement survey, the National Association of Retirement Plan Participants (NARPP) found 30 percent of retirement savers trust their plan provider. This figure represents a 4 percentage point upsurge from the lowest recorded trust rating, 26 percent in 2016.
“Following the same trend, confidence has increased to 46 percent from a low of 35 percent in 2014,” the NARPP said in its report. Both improvements should mean good things for savers’ retirement outlook.
“Trust is what allows the entire retirement ecosystem to flourish,” NARPP Co-Founder Laurie Rowley said in a statement. “Trustworthiness is the most important factor for employers when selecting a 401k provider, and people save more and make better financial decisions when they trust their plan provider.”
Study results indicated the top eight most trusted retirement plan providers are:
- Charles Schwab
- TIAA, T. Rowe Price
- Wells Fargo, Fidelity, Bank of America/Merrill Lynch
- Alight (Aon)
- Vanguard
Financial institutions in general, however, did not achieve a similar swell of approval, according to the survey. Just 13 percent of respondents think financial institutions can be trusted to make decisions that are in their best interest.
According to data, there are several areas in which retirement savers are lacking financial know-how. If plan providers focus on filling in these gaps in knowledge, it could go a long way in fostering even better provider-participant trust. For instance:
- Only 49 percent know how much they’re paying in fees
- Just 19 percent understand investing principles
- A mere 17 percent feel information they received from their provider is in their “best interest”
“This study shows that financial firms who want to improve retirement savings outcomes must evolve their role from just account providers to trusted partners that people can turn to for help on holistic financial wellness,” the report concluded.
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.
Why was this particular item even a question? ‘ Just 13 percent of respondents think financial institutions can be trusted to make decisions that are in their best interest.”
If any investor in any way thinks a financial institution is acting in their best interest, well that just shows once again our lack of financial acumen. In regards to the 401k plan, they should have been asking if they think their Employer has ensured the plan providers have been chosen for the sole best interests of the participants. Not because Joe the broker is their pay, or integration with payroll is a convenience, etc etc
And Vestwell.com, of course!
I am confused – title says Top 8 and the article lists only 5. So, is it 8 or 5 and if it is 8, who are the other 3?
Number 3 has a few commas – check it again
Wells Fargo? Today’s Investment News article about Wells tells a very different story.
I agree. How can Wells Fargo possibly be “trusted” to secure one’s future when they have been caught setting up millions of fake accounts on their customers and then going to extensive levels to ensure their employees don’t report the practices. If you read the reviews on sites like Glassdoor and Indeed, you can see how current and former employees comment often on how the company lacks integrity. Even the Federal Reserve has stepped in to limit the deposits Wells Fargo can accept based on their past practices. Also, Wells Fargo has been running ads (at least around here) talking about they’ve messed up and are trying to “re-establish” themselves. If a company is spending a ton of money on ads talking about how they’ve screwed up before, how they are possibly on a “most trusted” list?