Forty six percent of participants who say they “definitely will” keep assets with their provider (either in the plan or a rollover) after leaving their job. (Photo: Getty)
If people aren't confident that what they're doing is advancing them toward their goal, they're likely to quit or make bad decisions—and according to a J.D. Power report, retirement plan participants are experiencing a “crisis of confidence.” That bodes ill for how they'll do in retirement.
According to the J.D. Power 2019 U.S. Retirement Plan Participant Satisfaction Study, only 17 percent of plan participants say they're “very confident” in their retirement preparedness—and it's even worse among boomers, at just 15 percent. Considering that 10,000 boomers a day are entering retirement, retirement plan providers need to rethink their approach on both digital tools and human advisors.
“Understanding the drivers of confidence is critical for retirement plan providers because it's directly linked to roll-in and rollover decisions,” said Mike Foy, Senior Director of Wealth Management Intelligence at J.D. Power. “When retirement plan participants feel confident about their retirement, they are much more likely to bring assets to their primary plan from other sources, and to keep those assets with the provider after leaving their current job.”
The study finds, unsurprisingly, that confidence is higher in retirement plan providers when plan participants are “very confident” in more than half of the 11 areas related to retirement that the study examined—compared with those who are “not confident at all” in at least one area—in fact, it's nearly 220 points higher on a 1,000-point scale.
Who's topping the lists in delivering this confidence? Among large plans, Charles Schwab, netting a score of 821. Bank of America is winning medium-plan participants' confidence (836 points) and Fidelity Investments tops the small-plan segment with a score of 790.
In addition, that confidence pays off for plan providers in the 46 percent of participants who say they “definitely will” keep assets with their provider (either in the plan or a rollover) after leaving their job and the 47 percent who have rolled in assets to their primary firm when participants say they're “very confident” in a majority of areas.
And while it's all very well to provide digital tools, that's not enough; participants also want to deal with humans. They have the highest levels of overall satisfaction, at 877 points, and confidence in a majority of areas (46 percent), when they're tied in with providers in multiple ways: online tools, digital self-service and professional advisors.
Boosting mobile engagement, the study finds, rather than just relying on websites and phones, offers a two-pronged benefit to providers: not only do they save on more expensive ways to interact with participants, but when those participants can use mobile tech not just to review information but to perform transactions and communicate with their provider, their satisfaction is “dramatically” higher.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
