July 31, 2012 (PLANSPONSOR.com) - Plan sponsors' loyalty to their retirement service providers has shown a marked increase from last year, according to Chatham Partners' annual Provider Loyalty Index scores.
In 2012, the percentage of clients who were classified as "loyal" using Chatham's proprietary loyalty algorithm increased 6 percentage points, from 52% in 2011 to 58% in 2012, while the proportion of clients classified as "at-risk" declined from 20% to 16%.
A more detailed analysis of attributes that are highly correlated to satisfaction and loyalty suggests that plan sponsor loyalty and Net Promoter Scores (NPS) improved because retirement plan providers are excelling at key aspects of relationship management. Specifically, regression analysis indicates that satisfaction with plan sponsor administrative services and client service personnel have the largest impact on plan sponsors' overall satisfaction with their retirement plan provider, and scores for attributes associated with these areas improved considerably relative to 2011.
The top two box score for satisfaction with plan sponsor administrative services (the percentage of respondents providing a rating of 7 or 6 on a 7-point scale) increased 7 percentage points relative to 2011 (75% in 2012 vs. 68% in 2011), and significantly more sponsors agreed that their retirement plan provider helps them fulfill their fiduciary responsibilities (79% vs. 66%).
In addition, plan sponsors were much more satisfied with client service delivery in 2012, rating their providers' client service personnel 11 percentage points higher (78% vs. 67%). Sponsors were also more likely to agree that their provider reduces their administrative burden (74% vs. 65%) and that they are treated as an important client (77% vs. 70%).
These results may suggest that during a period of increased regulatory activity, those providers who pay attention to helping their clients understand and comply with the changing rules will reap the benefit of increased client satisfaction and increased loyalty, Chatham said.