While the greatest single influence on participants in retirement plans to save is the employer match, record keepers' actions and influence, put together, can add up to a force just as powerful.
That's according to the second annual Participant FELT (Financial Empowerment, Literacy and Trust) Study from the National Association of Retirement Plan Participants, a nonprofit organization and advocate for individual savers in 401(k) plans.
According to NARPP, the study's objectives are to identify the top influences on retirement savings, and to measure the success of individual plan providers in helping participants save. Other elements of the study are the importance of participants' financial literacy and their trust of service providers.
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The FELT score is a composite index of critical factors controlled or influenced by the service provider that have an effect on participant savings. And, according to NARPP, service providers have a way to go before they can be said to be truly encouraging in promoting better participation and savings rates.
The study found that trust in financial institutions in general is a lowly 13 percent, while trust in plan record keepers isn't doing a lot better: just 28 percent of participants say they can "always trust" their record keeper to do what's right.
Among different record keepers, participants' responses ranged from a low of 14 percent to a high of 36 percent — not exactly a sterling recommendation.
Since education plays a large role in getting participants to save, it's not exactly encouraging that the average satisfaction rating for providers' education programs was just 38 percent.
"Current education materials are generally jargon-filled and complicated, and they often include a healthy dose of thinly veiled sales information — people react negatively to these messages, especially millennials," Laurie Rowley, cofounder and president of NARPP, said in a statement. Rowley added, "It's the 21st century; people expect (and should demand) simple, customized messages that are relevant and engaging."
Only 23 percent of participants believe that their provider offers the best plans, with 26 percent saying that the provider is helping them meet their savings goals. Just 27 percent say providers care about participants' long-term financial security. And 30 percent of participants said that information about fees is presented in a way that is easy to understand.
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