DC Plan Sponsors Reward Providers that Deliver on Critical 401(k) Services

Our latest report concludes that retirement plan sponsors’ needs and priorities vary significantly by plan size, and providers that succeed in delivering in these specific areas enjoy stronger loyalty among the plans they service. This and many other findings are contained in Retirement Planscape™ 2010 – an extensive industry report which is based on a nationally representative survey of 2,193 401(k) sponsors in the U.S.

Among micro-plans – that is, groups with under $5 million in plan assets – it turns out that across seven core areas of service delivery, the area of administrative support is the most critical driver of sponsor loyalty. Meanwhile, for plans with between $5 million and $20 million, a much broader set of needs and concerns come into play, including plan participation support, fees, and administrative support. Finally, among larger plans – those with more than $20 million in asset – the ability of retirement plan providers to help sponsors with participant communications and problem solving has a critical impact on loyalty.

“These findings reflect the day-to-day realities that sponsors face across the full spectrum of plan sizes,” said John Meunier, Cogent Principal. “At the most basic level, micro-plan sponsors need help getting their plans up and running. As plan assets grow, so too do sponsor needs, not only to manage the plan but participants and costs as well. And when we’re talking about the biggest plans, it’s more about accountability to stakeholders, and keeping the plan and participants on track.”

Among ten leading providers serving the micro-plan market (<$5 million), Bank of America Merrill Lynch achieves the highest loyalty rating with sponsors it currently serves, followed by ING and Mass Mutual. Among eleven leading providers serving small plans ($5-$20 million), Fidelity Investments achieves the highest loyalty rating, followed by Principal Financial Group and Mass Mutual. Finally, among ten of the biggest providers serving plans with more than $20 million in plan assets, Vanguard earns the highest loyalty ratings from sponsors it serves, followed by Charles Schwab and Fidelity. The loyalty rankings for the leading providers by plan size are as follows:

“These results clearly illustrate how difficult it is for any single provider, even giants like Vanguard or Fidelity, to garner top loyalty ratings across multiple segments,” said Meunier. “Each market is a different ball game, and there are clearly niche players capitalizing on unique strengths in each arena.”