Of the group with external recordkeepers, 80% would select the same recordkeeper again, and 83% would also recommend the recordkeeper to another company. Ten percent said they are likely to swap recordkeepers in the next year.
Generally, Principal found, sponsors with bundled recordkeeping services are more satisfied than those with recordkeeping-only plans.
What makes them satisfied? Principal said sponsors are looking for providers meeting their needs for costs, accuracy, assurance that plan participants have quality access to plan information, and the ability to offload the plan sponsor administrative burden. Timeliness, quality, and the accuracy of reports and statements are also important factors.
The survey found plan sponsors finance their nonqualified deferred compensation plans using a diverse set of methods. The top three informal financing methods identified in the survey were: mutual funds, COLI, and the use of other corporate assets. When asked prior to the economic downturn in the fall of 2008, there was high satisfaction among plan sponsors regarding their financing methods, with few indicating planned changes.
“Therefore, plan sponsors will be looking for recordkeepers that can support nonqualified solutions with specialized resources, exhibit a breadth of experience, and offer administrative efficiency. These providers must offer best plan-design practices that meet plan sponsor needs while satisfying Section 409A and regulatory requirements,” The Principal concluded in the report.
Helping Participants Reach Retirement Goals
By polling both sponsors and participants, the survey also found most (92%) of deferred compensation plan participants indicated the plan is important to reaching their retirement goals. However, fewer plan participants indicated that the plan is important to their decision to take a new job (74%) or stay with a current employer when a plan is available (64%).
When ranking options that are not plan specific, participants valued investment advice the most, followed closely by financial planning and retirement calculators.
Principal worked with the Boston Research Group to interview a total of 221 plan sponsors via the phone and 303 participants via the Internet.
The survey report is available here.