DALBAR Cites Web Standards, Shortcomings

January 26, 2004 (PLANSPONSOR.com) - Plan sponsors and participants are increasingly relying on the Internet to manage and maintain their retirement plan investments, and a new study details both the current state of the industry - and areas of needed improvement.

DALBAR Inc. has recently published its DC Plan Sponsor Web Site Benchmarks report, outlining what the Boston-based firm found to be the most prevalent Web site features, as well as the areas needing the most improvement in its review of plan sponsor Web sites across the industry.

DALBAR notes that plan sponsors are obligated to conduct sophisticated tests on the plan and create reports to meet compliance, administrative, and fiduciary responsibilities, and that many plan providers have successfully migrated these activities to plan sponsor Web sites, thereby reducing print, postage, and paper costs, as well as operational costs for call centers and processing. However, the results of its analysis indicate that both the ease of use and capabilities of these Web site tools vary tremendously.

Plan Administration

With regard to plan administration capabilities, DALBAR found that all sites evaluated offered the ability to view the total plan balance as well as the balance by investment options, and the ability to run predefined reports. Other prevalent features included:

  • 83% – View balances by source – match vs. contribution vs. rollover
  • 75% – View price, # of shares, and market value of assets in each investment option
  • 75% – View plan’s asset allocation

Only 75% supported the ability to run reports based on a specified date or specified date range, however.

DALBAR identified several areas of relative weaknesses in industry-wide Web site support of plan administration, including:

  • Sending contribution/loan payments and payroll files electronically to the provider (offered by only two-thirds of plan sponsor Web sites).
  • Performing nondiscrimination testing (only 17% of sites provide this testing online).
  • Documenting the sponsor’s specific plan policies and procedures (details provided on only one-third of plan sponsor Web sites).

When it came to accessing participant level activity, DALBAR says that all evaluated sites provided the ability to view a participant account, to view an account by investment, and by contribution type (source). Most supported the ability to view the asset allocation of a participant account (92%), a history of participant requests (92%), and participant indicative data (83%), while three-quarters support the ability to update participant indicative data.

DALBAR notes, however, that only a quarter of sites evaluated allow sponsors to review communications sent to participants (from the provider or sponsor, electronically or by mail), and only one-third allow plan sponsors to post messages on the participant Web site or send e-mails to a selected group of participants.

Other Areas

In terms of investment selection and monitoring, DALBAR noted that all sites evaluated included the performance of all investment options available for one, three, five, and 10 years, and since inception. Additionally, 92% offered access to fund fact sheets (objective, strategy, expenses, holdings, etc.). However, only 75% provided performance compared to relevant benchmarks.

While most sites provide access to general compliance updates, very few sites (only 17%) are effective at presenting a complete overview of the plan sponsor's duties, responsibilities, and fiduciary obligations, coupled with specific steps and/or guidelines to follow that are written in plain English, according to DALBAR. In addition, only one-third of plan sponsor sites allow sponsors to conduct compliance tests online.

The report notes that while many sites importantly report on legislative and regulatory news (83%), and market indices and quotes (83%), far fewer provide access to other updates such as market and investment news (58%) and links to financial services sites (42%).

Obstacles to Usability

In terms of overall usability, DALBAR said the greatest obstacles to plan sponsor Web sites' usability lie in:

  • No access to specific online help (not offered by 58% of sites).
  • No detailed methods for contacting the company, aside from e-mail (no phone numbers on 42% of sites).
  • Web-based support that does not take into account the plan sponsor's most frequent behaviors and concerns, hence not being behaviorcentric.

Regarding specific help for the plan sponsor in using the site, DALBAR noted that just:

  • 33% - offered a "What's new at Web site"
  • 50% - offered a site map
  • 8% - offered a search feature
  • 42% - offered help specific to the site section
  • 58% - offered help filling out forms
  • 25% - offered forms and worksheets pre-filled with plan information when available
  • 33% - offered online assistance and thorough explanations from anywhere on the site
  • 58% - offered answers to frequently asked questions (FAQ)
  • 75% - offered a glossary
  • 33% - offered demos/tutorials