With participant interactions shifting to digital channels, a new study finds that a majority of retirement plans are failing to deliver proactive guidance and many have made it more difficult to find the information users are seeking.
For instance, just 24% of retirement investors strongly agree that their provider offers proactive guidance and help, according to J.D. Power’s 2021 U.S. Retirement Plan Digital Satisfaction Study. Additionally, fewer than half of respondents (43%) found it very easy to locate the information they were looking for on their retirement plan websites and mobile apps.
The study, which was formerly known as the U.S. Retirement Plan Participant Satisfaction Study, was redesigned to focus on investor interaction with retirement plan digital channels. Fielded in May and June 2021, the results are based on the responses of 5,363 retirement plan participants, with satisfaction scores measured across information/content, navigation, speed and visual appeal.
Among the key findings of the study:
Proactive guidance is key to customer engagement, but few retirement plans deliver. Net Promoter Scores significantly increase by 51 points among participants when their retirement plan provides proactive guidance via digital channels. Participants who receive this guidance are also 25 percentage points more likely to keep their retirement assets with their current retirement plan provider or roll over to a separate IRA with that provider. Yet, despite these benefits and as noted above, just 24% of retirement plan investors say they strongly agree that their retirement plan provider offers proactive guidance and help.
Apps are key. Overall satisfaction with the mobile app experience is 69 points higher than for websites, yet only 35% of participants have downloaded their retirement plan provider’s app to their phone. By comparison, 52% of utility residential customers have downloaded their energy provider’s app.
Guidance and overall financial health. Retirement planning and savings can’t be done effectively in isolation from a participant’s other short- and long-term financial goals and needs. While more than half (58%) of plan participants generally consider themselves financial healthy, among those who are not—including the overextended, stressed and vulnerable—satisfaction scores are much lower for the value of the information and content provided. Here, J.D. Power suggests that providers need to do a better job of understanding participant needs and delivering more relevant digital content.
“Very often an individual’s first experience with investing happens within an employer-sponsored plan, giving these plan providers an inside track to build a relationship and retain and grow the participant’s assets long after they have separated from their current employer,” observes Mike Foy, senior director of wealth management intelligence at J.D. Power. “Many of these providers have invested significantly in developing digital content and tools to provide education and guidance, but if participants are unaware of those resources or can’t easily find or use them, it’s a huge, missed opportunity,” he says.
According to the findings, the top and lowest performers in the study were separated by nearly 100 points on a 1,000-point scale. Charles Schwab ranked highest in retirement plan digital satisfaction with a score of 725. Bank of America (formerly Merrill) ranked second with a score of 703 and AIG Retirement Services ranked third with a score of 699, followed by T. Rowe Price (698) and Fidelity (694).