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Data & Research June 6, 2014
Trustworthiness Important in Selecting Plan Provider
What factors influence plan sponsors' selection of retirement plan providers?
Reported by Kevin McGuinness
According to the “Plan Sponsor Trust and Confidence Study” from the National Association of Retirement Plan Participants (NARPP), among all of the factors that influence plan sponsors in the plan provider selection process, trustworthiness ranks as the most important.
Other important factors include:
- Participant customer service;
- Quality of the customer experience;
- Technology;
- Education;
- Administrative service; and
- Pricing.
The study also reveals a great deal of pessimism about the trustworthiness of financial institutions in general. Only 9% of plan sponsors say they can “always trust financial institutions to do the right thing for plan sponsors and participants.”
Sixty-five percent of plan sponsors say they can “always” trust their current providers to do what is right. There is a wide variance among plan providers on trust ratings with a high of 86% to a low of 40%.
Level of accountability is a key factor that can either build or erode trust in a plan provider. Fewer than half of plan sponsors (45%) feel their current provider has been accountable in following through on promises. Other key factors that impact trust include the “incidence of problems with service provider,” as well as whether a plan provider understands plan sponsor needs and whether a provider values the plan sponsor’s business.
Developed in partnership with Stanford University, the study answers three questions: 1) to what extent does trust matter in the plan provider/plan sponsor relationship; 2) who are the most trusted plan providers; and 3) what are the factors are that both build and erode trust?
“We know that employers are relying on financial institutions as partners in helping secure a financially stable future for their employees,” says Laurie Rowley, founder of the San Francisco-based NARPP. “For the first time, this study provides plan sponsors with sound data and metrics on trust, confidence and accountability among leading retirement plan providers. These measures are critical when evaluating plan providers to partner with.”
Data collection for the study took place in April and includes the opinions of 809 plan sponsors, whose plans range in size from less than $5 million to more than $250 million in plan assets, the average being $90.5 million.
To request a copy of the study results, email Laurie Rowley at Laurie.Rowley@NARPP.org.