Thanks in part to an extended bull market, more 1st wave boomers and Gen Xers have chosen to keep their retirement assets in a former employer’s plan for at least five years, welcome news for plan providers looking to keep assets in-house. But with a significant decrease in overall satisfaction among former plan participants this year, plan providers must take heed that investment performance is not the only factor that retains client assets. These and other findings are from DC Participant Planscape™, an annual Cogent Reports™ study by Market Strategies International-Morpace.
Nearly half (46%) of former plan participants did not take any action with regard to rollover options in 2017 and almost as many (43%) intend to leave their assets in-plan this year. Participants report staying in-plan because they are content with the investment performance and choice of investment options and have no intention of moving their assets unless absolutely necessary.
“It’s tempting for plan providers to lean on market returns for help with participant satisfaction,” said Julia Johnston-Ketterer, product director at Market Strategies-Morpace and author of the report. “But the day will come when market action works against plan providers. Firms that demonstrate success in other key drivers of participant satisfaction―website and online capabilities and retirement planning tools―will be better equipped to weather future market volatility.”
According to the report, the firms earning the highest level of former participant satisfaction, and thus those best positioned to retain assets in-plan, are:
|6||T. Rowe Price|
|7||Merrill Lynch/Merrill Edge|
Source: Market Strategies International. Cogent Reports™. DC Participant Planscape™. July 2018.
“The secret to success for plan providers is to find the right balance between maintaining high satisfaction with former participants who decide to leave their assets in the plan while at the same time being ready to cross-sell with rollover IRAs and other investment servicers,” added Linda York, senior vice president at Market Strategies-Morpace. “Continuing and deepening the relationship―whether it is with a former plan participant or a rollover IRA investor―is key.”
About DC Participant Planscape™
Cogent Reports conducted an online survey of a representative cross section of 4,986 DC plan participants from April 30 to May 18, 2018. Survey participants were required to be 18 years or older, and contribute at least 1% to a current plan and/or have $5,000 or more in at least one former plan. Cogent Reports uses market-sizing incidence survey findings, which are weighted to US census data, to develop quota targets followed during fieldwork and apply minimal statistical weighting post-fielding. The data have a margin of error of ±1.39% at the 95% confidence level. Market Strategies International-Morpace will supply the exact wording of any survey question upon request.