Survey Finds Participants Lagging in Use of Online Plan Info

January 26, 2001 ( - Before plan sponsors move too quickly into offering their participant information over the Internet, they better make sure their employees even know they can access their statements online.

That’s one of the basic findings of a new study by Boston Research, which conducted 2,100 participant interviews, covering over 1,000 pension plans nationally serviced by some seven recordkeepers.
According to the study, 55% of those surveyed did not even know their employer offered an Internet-based statement. The good news is that 82% of the study’s participants said they have access to the Internet.
“This means sponsors have all sorts of opportunities to use the net,” Warren Cormier, president of Boston Research, told “It’s clear the Internet has been democratized among plan participants, and since many people have access to the net all the heavy lifting has been done already.”  But there is a lot of lifting yet to be done.

Phone Reps, VRS Preferred
For those participants who access their 401(k) information electronically, their level of satisfaction with the plan’s Web site is “not that bad in terms of what people expect,” Cormier said.

About half of the people interviewed rated their level of satisfaction with their company’s Web site, and about half said they were satisfied with their company’s Web site overall.  That is not as high as with the satisfaction level rated for phone reps, voice response systems and paper-based statements, but higher than employee education.

The bad news is that only half the people are satisfied with what 401(k) information they are currently getting online.
Brand, Reputation Matters
But keeping this in perspective, the study found that the heaviest contributors to a high level of participants satisfaction with their 401(k) plan were more basic issues, such as good education, readable account statements and one finding which surprised the researcher: the investment manager’s brand reputation for delivering investment performance.

Branding – the recordkeeper’s reputation for good investment management – has become “the most powerful driver” in 401(k) plan satisfaction.  “If you have a brand name recordkeeper, and also a brand name investment manager, the participant satisfaction measure goes much higher,” according to Cormier.

“We were a little surprised to see the importance of branding and reputation rank this high,” Cormier said. “Brand strength is clearly related to investment performance. That is sort of a breakthrough.”

Other Key Findings

  • The presentation and readability of account statements is very important. Cormier said   finding good summary data on the account statement is “the most important driver.” “This is a very simple way to improve overall participant satisfaction since the vast majority of participants do not interact with their recordkeepers aside from looking at their quarterly statements,” he said.
  • Only half are satisfied with the ease of the navigation of the Web site.
  • Most people access their company’s Web site from home using a slow dial-up connection, so Cormier’s advice is to “keep the Web site itself simple” graphically and from a readability perspective to minimize downloading time.
  • Participants are least happy with the retirement planning tools available on their company’s Web site.  For instance, while retirement calculators are acceptable, survey participants said they are not considered useful. Getting retirement planning software on the net is a goal, but only 35% said they are “very satisfied” with its usefulness.  “It is not only a matter of getting something up on the Internet, but you have to get something good on the site. So far this is not a very good report card on what is being put up there,” Cormier said.

Reaching the Top
Survey results found that mid- to upper- level management are the heaviest Internet users and also the most sophisticated.

Alternately, only 23% of participants who were classified as  “worried, young workers” and tend to be in less skilled labor positions, said they were confident making plan-related decisions.

This group was also much less likely to go on the net.  “So when people think about who is using the net, it is upper and middle management who rate themselves as being “very experienced” investors who have done well in the stock market,” Cormier said.
Channel Preferences
The survey also found that about a third of respondents said the Internet is the “most preferred” channel to conduct routine transactions for their account. About one-quarter said they prefer speaking with phone reps and using telephone response systems.

“The migration to the net will take a lot of work,” Cormier said. While using the Internet ranks very high for performing basic transactions (such as changing beneficiaries or allocations) that still only accounts for about one-third of respondents. The rest prefer using other more costly communications channels, such as phone reps, phone response systems or speaking with a benefits counselor.

Some findings about participant preferences:

  • For changing how much money is invested in plan, 30% opt for the net, vs. 27% for phone reps
  • Conducting account service activities saw 27% opt for the net and 28% for phone reps
  • About 31% prefer the net to make changes in plan investment options
  • To report or resolve a problem, found only 5% said they preferred the net, but 50% said they would use a phone rep and 30% wanted to do this in person. “Even sophisticated investors wanted to do this in person,” Cormier said.
  • Getting investment advice also produced a poor result for the net; only 15% opted for the net, 22% by phone.

Lackluster Activity

  • As to the level of activity, 34% of respondents said they visited the company Web site in the past 6 months.  The number was higher  (52%) for participants who considered themselves “confident money investors.”
  • About 82% of participants said they have access to the net.  This is about twice as high as the general population.
  • As to how often respondents use their sponsor’s Web site, about half said they never use it, 12% use it annually; 8% use it weekly; 11% monthly; and 14% quarterly.

– Chuck Epstein