Diversions August 16, 2012

Connections Need More Connectivity, Business Travelers Say

Memo to airport and airline execs: Business travelers want mobile app notification, reliable WiFi and self-service boarding options.
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It’s time to get on board with advanced travel technology, said more than 600 business travelers in a survey conducted by FlightView, whose website provides flight tracking. Almost all business travelers want a flight status sent to their phones. About two-thirds want to be notified by phone of seat upgrade availability, and nearly three-quarters would like to receive an alert when their flight is boarding.

Airport and in-flight WiFi is a nightmare, according to survey respondents, who described it as unreliable, limited and frustrating.

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Boarding capabilities need to go mobile. More than 80% of business travelers who lacked access to mobile boarding passes said they would have used them. Rebooking on another flight should be possible using a mobile app, said 70% of travelers, and standby status and terminal maps should be accessible by phone or mobile device.

 The vast majority of travelers want the status and gate location of their next flight pushed to their phones when they’re on the first leg of a connecting flight. About half said walking directions to the next gate would be helpful when rushing to make that second flight.

Other items on the business traveler’s wish list are purchasing ticket upgrades and booking ground transportation.

When flights are significantly delayed or canceled, conflicting flight information is the No. 1 source of frustration, followed by inaccurate or unavailable updates on new departure times, and having no insight into the plane’s location and when it will arrive at the gate.

 In the face of significant delays and holdups, the experience could be improved with free WiFi, access to airline lounges and displays showing the location of a plane when it’s not at the gate, business travelers said.

“Business travelers, pressed for time, want access to new tools and technologies that make traveling easier and more efficient,” said Mike Benjamin, chief executive of FlightView. “Every time an airport or airline rolls out a new offering, it raises travelers’ expectations, which, in turn, puts pressure on others in the industry to quickly adopt and integrate new technologies.”

 

Data & Research August 15, 2012

Many Participants Do Not Understand Fees

More than half of participants surveyed do not understand retirement plan fees, indicating a need for education before the fee disclosure regulation goes into effect this month.  
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The Employee Retirement Income Security Act (ERISA) 404(a)(5) regulation requires plan sponsors to provide fee information to participants by August 30. According to the bi-annual Defined Contribution Investor Survey from State Street Global Advisors, 61.8% of participants said they do not understand fees.

When participants receive their first statement reflecting the new fee disclosure regulation, they may have a strong reaction to the fees listed, even though these are fees they have always paid (see “Participant Education Needed Before 404(a)(5) Deadline”). This reaction could be based on a lack of understanding, Jake Winegrad, adviser at Moneta Group, told PLANADVISER.

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“People don’t like paying for something that they don’t understand,” he said.

The survey also found that while 40.1% want to understand fees, only 18.7% said they would use that understanding to inform their investment choices.  

Winegrad said that although he fully supports the regulation, he is concerned that the participants who carefully read their statements might begin making investment choices based solely on fee amounts. “There are many other factors that need to go into your investment election decisions,” he cautioned.   

 

Advisers and sponsors should explain to participants that if investment choices are made based on fees only, it could result in a portfolio that is not diversified.

Many participants, however, will not look at fees on their statements, Winegrad predicts. Regardless, it is still important to explain the changes that will occur after the regulation goes into effect. “With this type of stuff, if you can be proactive, it’s much better,” he said.

Winegrad suggests plan sponsors schedule meetings before the regulation goes into effect or have participants call plan advisers directly about fee disclosure questions. “That can be a way for the plan sponsor to unburden themselves from that workload,” he said, although he acknowledged that some participants do not have access to the adviser.

Kristi Mitchem, senior managing director and head of Global Defined Contribution for State Street Global Advisors, said plan sponsors can help participants understand the context of their fees by comparing them with industry averages.

Sponsors and advisers can also help participants calculate their fees, Mitchem added. The Department of Labor’s (DOL’s) template requires participants to do math to determine what they are paying because the fees are expressed both as a percentage of assets and as a dollar amount per $1,000 invested.

“The majority of employees aren’t going to do [the math],” said Tom Gonnella, executive vice president, corporate development at Lincoln Trust Co.

He suggests sponsors request from providers a more user-friendly fee disclosure template than the DOL’s, so participants do not have to calculate their fees. 

 

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