According to PLANSPONSOR’s seventh annual Defined Contribution Survey, the more than 3200 plan sponsor respondents ranked service to participants a 6.58 on our 7.0 scale. Similarly, there has been little shift in what plan sponsors considered second most important-the quality of service to the plan sponsors themselves, which rated a 6.47 on the same 7.0 scale. In fact, service was not only the most important criteria in evaluating a service provider, but also, once again, the predominant factor in deciding to dump an incumbent relationship (well ahead of features and fees).
There was, however, movement below those elements on the scale: Investment performance reclaimed its place at No. 3 on the list from financial strength of the provider, which nonetheless managed to remain a close No. 4, garnering a rating of 6.33. Both elements made significant gains on the top two items, relative to last year’s results.
While the focus on participants is hardly an earth-shattering insight to most, for the second year in a row, the very worst rated services were the heart and soul of participant service. Once again, the overall participant education program earned the lowest marks from plan sponsors, garnering a mere 5.48, though that was better than last year’s 5.32 showing. Similarly, participant communication materials were next to last, with a rating of 5.83, while call centers garnered an overall ranking of 5.90. Clarity of participant statements managed to climb above the 6.0 mark, but just barely.
Not that these relatively low evaluations constitute a mass condemnation of the industry’s efforts in this area. To some extent, they likely mirror the importance of the participant touch points to the overall program. Clearly, plan sponsors have high expectations-and rightly so-for their participant communications. And never was that more critical than in these times of extended soft markets and the apparently relentless media drumbeat about the problems with 401(k)s. Providers that are complacent in these areas act at their own peril.
There were certainly bright spots, of course. Participant service areas of accuracy and timeliness of participant reporting stood out, as did turnaround time on checks and participant Internet services. In fact, the latter was broadly available to participants across all market segments.
Nearly all (97%) could perform account balance lookup via the Web, while roughly 94% were able to perform transfers and account rebalancing online. Getting money out of the plan was a bit more problematic, with just about half offering access to online loan distribution, and just 53.9% had the ability to make deferral changes online.
Still, when it comes to evaluating participant Internet services, plan sponsors handed their providers an impressive 6.26 rating on our 7.0 scale. Indeed, an investment in their Web sites appears to be well worth the money, as Provider's Web Presence notched an impressive 6.16 importance rating among sponsor evaluation criteria, up from "just" 5.93 a year ago. In fact, in last year's survey, the Web presence was one of only two categories to rise in importance.
TOMORROW: Hanging Tough?