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The coronavirus pandemic has presented a "make-or-break" moment for retirement plan providers and a new study from J.D. Power says the industry has room to ramp up providing guidance to participants.
J.D. Power's latest U.S. Retirement Plan Participant Satisfaction Study, based on responses from 10,159 retirement plan participants in February and March, examined investor satisfaction based on six factors. Those factors include engagement on live and online channels; investment and service offerings; and fees and expenses.
"The COVID-19 pandemic struck the U.S. right in the middle of the fielding period for this study, and it is crystal clear in our data that, as market turmoil increased, investor sentiment and economic outlook declined sharply," Mike Foy, senior director of wealth management intelligence at J.D. Power, said in a statement. "This left many retirement plan participants searching for answers and guidance that was simply not provided by their provider. At this critical time, plan providers are largely failing to provide the guidance needed by participants to make smart decisions to help them prepare for retirement."
Some of the top-level findings in the J.D. Power study: 29% of respondents said they were either unaware that retirement advice is available or they thought it was unavailable to them; 15% of participants said they'd received a personal communication via their provider's mobile app; and 22% of respondents said they had not interacted with their retirement provider in the past 12 months.
"This is a problem for providers because frequency of interaction is directly correlated to participant satisfaction," J.D. Power's study said.
The report ranked plan providers in three categories "based on their overall mix of business in terms of average plan size." Bank of America and Charles Schwab ranked highest in a tie, and Principal Financial Group was third, in the large plan segment, according to J.D. Power. Bank of America, Charles Schwab and OneAmerica led the medium-plan segment, the report said, and Fidelity Investments, AIG Retirement Services and Nationwide were tops in the small-plan segment.
"It's impossible to overstate the financial implications for firms that get the participant satisfaction formula right during this make-or-break moment," Foy said. "Historically, some plan providers have been focused only on the plan sponsor and, while that is changing somewhat, firms need to be laser focused on participants as well."
Mike Scarcella is a senior editor at ALM in Washington, D.C. Contact him at [email protected] and on Twitter @MikeScarcella.
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Mike Scarcella
Mike Scarcella is a senior editor in Washington on ALM Media's regulatory desk. Contact him at [email protected]. On Twitter: @MikeScarcella. Mike works on a slate of newsletters: Supreme Court Brief | Higher Law | Compliance Hot Spots | Labor of Law.
