The brand attribute of “trustworthiness” outranked more easily measured and objective factors such as consistency of investment performance and the experience of the investment team among advisers reviewing defined contribution (DC) plan service providers, according to the latest Retirement Plan Adviser Trends analysis in Market Strategies International’s Cogent Reports series.
In fact, according to the analysis, DC investment managers that fail to foster trust among DC producers have little chance of being considered for new business. The findings closely echo a previous analysis from the firm that considered the role of trust during the individual retirement account (IRA) creation and rollover process.
“The power of brand trust and its resounding impact on brand consideration cannot be underscored enough—brand trust is vital for gaining traction among DC advisers as well as DC plan participants and affluent investors,” explains Sonia Sharigian, senior product manager at Market Strategies and author of the analysis. “This is one of the most consistent and hard-hitting trends we’ve seen across a multitude of our studies.”
According to Sharigian, any financial services firm that is striving for growth or seeking to maintain its standing needs to pay attention to this metric.
“In an industry that appears to be plagued by lawsuits and negative media coverage, DC investment managers are facing a significant trust deficit,” adds Linda York, senior vice president at Market Strategies International. “As such, understanding current perceptions and monitoring the experience factors that build trust are imperative to the health of a brand’s DC business.”
It is only once trust has been established, York and Sharigian explain, that managers can “pivot to other leading consideration drivers such as value for the money, the experience of the investment team, company investment philosophy and global product offerings.”
Looking at actual firms operating in the DC marketplace, the analysis suggests American Funds, Fidelity Investments, Vanguard, BlackRock, and Franklin Templeton Investments rank highest among DC-focused advisers on trustworthiness.
The full analysis can be purchased and downloaded here.