401k 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 401k 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)
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.