Last year, fees were more often cited as the reasonfor firing a recordkeeper. (Photo: Shutterstock)

Workplace retirement plan recordkeeping fees, in free fall for adecade, may have found a bottom.

In 2017, NEPC, a consultancy to 401(k) plans and institutionalinvestors, reported the median defined contribution recordkeepingand custody fee was $59 per plan participant, whereas it was $118in 2006.

To retain and compete for business, successful plan providersare bolstering the service behind their product, according to asurvey of plan advisors by Cogent Syndicated.

"As service providers have become so much more competitive onfees, it's really service quality that is standing out as the keydifferentiator, for both plan advisors and plan participants," saidSonia Sharigian, senior product director at Cogent and author ofRetirement Plan Advisor Trends.

This year's survey put a practical question to more than 500emerging and established plan advisor specialists: Why do you stoprecommending a recordkeeper?

The support and quality of service given to advisors, and theoverall service quality delivered to plan participants were citedas the top two reasons. Fees were a relatively distant third.

That marks a change in advisor sentiment. Last year, fees weremore often cited as the reason for firing a recordkeeper–more thanthe service they deliver to savers.

"The personal touch is coming to the forefront on what isresonating with DC plan advisors," said Sharigian. "When we look atthe industry leaders, little things—like having provider personnelon site for participant education meetings—matter."

Recordkeepers such as The Principal Financial Group and EmpowerRetirement score well with advisors on that metric, said Sharigian.Strong digital capabilities are also a differentiator.

"The challenge is how to innovate on razor-thin margins. There'sa lot of pressure on service providers. Differentiation is beingestablished through service—that's not an area for providers totake lightly," she added.

Perfection is less the goal than accountability, according toCogent's research.

"What we find really interesting in some of our qualitativeresearch is that it's not so much a question of whether a providermakes a mistake, but how well they respond to resolve the error,"said Sharigian. "Demonstrating accountability when there is aproblem—like a transaction error—can go a long way in building moreloyalty with advisors. Lack of accountability ranks high among thereasons why advisors drop providers."

Respondents were asked to rank 14 service providers on thequality of their support to advisors, and separately on theirsupport to plan participants. Here's how the service providersranked:

Plan advisor service and support

1. Principal Financial Group

2. Empower Retirement

3. America Funds

4. Lincoln Financial Group

5. Fidelity

Participant service and support

1. Principal Financial Group

2. John Hancock Retirement Plan Services

3. Fidelity

4. American Funds

5. (tied) Lincoln Financial Group, Empower Retirement