Half (51%) of study respondents have access to an adviser through their defined contribution (DC) plan, 19% do not and 30% do not know if they have access to an adviser. Among those with access, the most preferred method by every age group to work with the adviser is in person, but this is especially true for the oldest and youngest participants. Forty percent of the Silent Generation (born 1925 to 1942) want in-person meetings with advisers compared with 48% of Gen Y.
When presenting the study findings during a Web event, Marie Rice, practice director of custom research at Cogent Research, said the findings about DC participants’ reaction to match contributions surprised her. When the match is 4% or less, participants tend to contribute a higher rate than match; the deferral rate equalizes to the match at 5% to 6%. However, when the match is 7% or higher, participants again defer more. Rice noted that this is something employers should consider when creating a match formula.
Regardless of the size of their employers, two-thirds of participants say employers should offer automatic deferral increase and automatic rebalancing features in their DC plans. So, if employers are feeling hesitant about implementing automatic features, employees would welcome them, Rice said.
Another “aha” moment for Rice occurred when she asked about sources of retirement income, the study respondents pointed to their DC plan, employment income and Social Security. Rice said this made her realize the definition of retirement is changing; the three-legged stool of retirement income used to be a pension, Social Security and personal savings. But, pensions and personal savings are not legs of the stool anymore, and Social Security is ranked last of the three.
Eighty-three percent of participants responding to Cogent Research’s DC Participant Experience study want direct contact from their DC providers about their retirement savings progress. Forty-nine percent said they want personal emails, 38% regular mail and 34% work emails. Fifteen percent would like phone calls, and 11% one-on-one meetings.
Nearly eight in 10 (78%) want contact from their providers at least annually (40% would like contact twice per year and 19% monthly). Rice said this indicates plan sponsors may want to send advisers out to employees more than once a year, and they should encourage providers to contact participants.
Participants indicated they are most satisfied with enrollment materials (62%), account statements (65%) and website and online capabilities (63%) of their providers. This was followed by retirement planning tools (55%), investment planning tools (54%) and the number of investment options (53%).
The highest driver of provider satisfaction participants cited was investment performance, but only 47% indicated they are satisfied with this. Rice said providers should not be upset because they have no control over this, but should look at the other drivers they do have control over; number of investment options and website an online capabilities ranked second and third for drivers of satisfaction with DC providers.
DC participants are most likely to consider their DC providers first for rollovers; however, the main reason cited by those who said they would not go to their DC provider first was they do not know enough about the provider firm. Rice pointed out this is a reminder for providers to use websites and account statements to educate participants about more than their DC plans.
The study report breaks out some statistics for 401(k), 403(b) and 457 plans. For the study, 4,926 DC participants currently in a plan or formerly in a plan were surveyed between August 24 and October 5. To request the study report, visit http://goo.gl/TLezZ.