K Plan Participants Still Happy With Providers

April 30, 2003 (PLANSPONSOR.com) - Despite declining 401(k) account balances, participants are still satisfied with the job their service providers who handle the recordkeeping and investments for their plans are doing.

Overall, 87% of participants said they were either “very satisfied” or “somewhat satisfied” with their 401(k) plans, with 48% responding to the highest level. The high marks have declined slightly since 2000 though, when 91% of participants recorded satisfaction responses (53% at “very satisfied”), according to a study by the Society of Professional Administrators and Recordkeepers (SPARK) Research group.

SPARK attributes the slight dropoff in satisfaction levels to three years of market declines. However, “the good news is that most participants are not planning to reduce contributions or completely discontinue participation in their 401(k) plans,” said Warren Cormier, co-chairman of SPARK Research Group.

Service Categories

Service category approval levels took their biggest drop among the 2,700 surveyed participants in investment satisfaction. Only 20% of participants said they were “very satisfied” with their investments, compared with 42% in 2000. Measuring all levels of satisfaction in 2002 showed:

  • very satisfied (20%)
  • somewhat satisfied (34%)
  • neither (12%)
  • somewhat dissatisfied (19%)
  • very dissatisfied (15%)

Comparatively, in 2000, 39% responding to being “somewhat satisfied,” with the remaining 18% scattered amongst the remaining three fulfillment levels. The study points out though that participants were never all that happy, with less than half satisfied with their investment options during the heyday of the bull market. “We believe this is because participants always think someone else is getting better returns,” said Bob Wuelfing, co-chairman of SPARK Research Group.

However, participants still hold out hope that the market is a good long-term investment. In fact, only one out of eight surveyed thought the market would continue to decline in 2003. Wuelfing said that concern over investment performance was a reason behind the increase to 64% from 60% of participants who said it was “very important” for their employers to provide access to investment advice.

Other declines in service category satisfaction levels were noticed in education and automated telephone systems. Overall, 76% of participants were satisfied with the education being provided by their providers, down from 82% two years earlier. Similar declines were seen in automated telephone system satisfaction, dropping slightly to 86%, from 90% in 2000.

One reason for the decline in automated systems may have been the slight increase in the number (55%) of participants who have become “very satisfied” with their provider’s Web site. This slight rise in the highest satisfaction level helped Web site satisfaction break even overall, with 89% of participants expressing some level of satisfaction, the same figure as 2000.