Despite the hoopla over fee disclosure, plan sponsors’ loyalty to their retirement service providers actually went up from last year, according to Chatham Partners’ annual Provider Loyalty Index.
The Index measures loyalty among plan sponsors with decision-making authority for their organization’s retirement plans and is calculated based on insights from over 7,000 plan sponsors. The data covers clients from 16 of the top 20 retirement plan providers.
In 2012, the percentage of clients who were classified as loyal increased 6 percentage points from 52 percent in 2011 to 58 percent in 2012, while the proportion of clients classified as at-risk declined from 20 percent in 2011 to 16 percent in 2012.
Gains in plan sponsor loyalty have also driven increases in clients’ willingness to actively endorse their provider, from 42 percent in 2011 to 48 percent in 2012.
The study found that satisfaction and loyalty to retirement plan providers increased because the plan providers excelled at key aspects of relationship management, such as administrative services and client service personnel.
The number of respondents who were satisfied with their plan sponsor administrative services increased 7 percentage points relative to 2011, 68 percent vs. 75 percent in 2012, and significantly more sponsors, 79 percent, agreed that their retirement plan provider helps them fulfill their fiduciary responsibilities.
Seventy-eight percent of plan sponsors also were very satisfied with client service delivery in 2012, rating their providers’ client service personnel 11 percentage points higher than in 2011.
Sponsors also were more likely to agree that their provider reduces their administrative burden and that they were treated as an important client.
“These scores are an important bellwether for retirement service providers. Engendering a superior client experience and creating a more loyal client is a strategic imperative that is crucial to long-term success in the retirement industry,” said Chatham CEO Peter Starr.
Only 59 percent of plan sponsors surveyed agreed that their retirement plan provider offers creative and innovative solutions, a 22-percentage-point decrease from 2011. In addition, only 62 percent of plan sponsors agreed that their provider helps participants reach their retirement goals.
“While the improved satisfaction scores are something about which providers should be pleased, these sub-optimal scores should serve as a strong reminder that there is still work to be done,” Starr said. “Providers must remain vigilant in creating differentiation in the crucial areas of efficient partnerships, investment services, and helping participants achieve better outcomes if they are to reap the strategic benefits of a more satisfied and loyal client base.”
Chatham Partners provides customized market research, including win/loss sales analysis and client satisfaction studies, multi-client research studies, and strategy consulting services that help businesses understand the explicit, implicit and latent needs of clients and prospects.