While DC plan fees are undoubtedly the top concern among plan sponsors with respect to deciding on a recordkeeper and ensuring fiduciary responsibilities are met, there are a number of recent differentiators during the RFP process when a plan is considering changing recordkeepers. Specifically, the participant and plan sponsor digital capabilities are of increasing importance when an organization is determining which DC plan provider to work with. At the end of the day, more traditional topics such as fees and investment lineup accommodation will take precedence in these discussions, but in an ever-evolving industry that is undergoing consolidation and increasing parity in terms of fees and investment lineups, digital capabilities will increasingly make or break recordkeepers’ business
According to data from our recent plan sponsor survey of 338 plan sponsors in June of 2019 on a number of key items, including their usage of plan sponsor portals, the quality of the plan sponsor portal can have a greater impact on the choice of a recordkeeper than the quality of the participant digital experience. Specifically, when a DC plan is up for bid and an organization is deciding on a recordkeeper, 91% of plan sponsor survey respondents say that the plan sponsor site experience is either of equal importance to, or more important than, the participant site experience. Further, according to PLANSPONSOR’s 2019 Recordkeeping Survey, there are a number of items related to the plan sponsor website that continuously are cited in RFPs, such as the mere existence of the site, cybersecurity systems, participant wellness metrics, plan analytics and retirement readiness tools.
Not only is the sponsor site playing a role in the RFP process, but according to our survey data, sponsors are frequently engaging with the portal, particularly when compared to the engagement levels seen with the participant site counterparts. Specifically, 68% of the sponsor survey respondents reported that they log into the plan sponsor website at least once per week, and 18% stated they log in daily. By contrast, in our 2017 DC Plan Participant survey, only 10% of respondents indicated they log in at least once per week. The majority of sponsors also view the plan sponsor site as crucial to their job responsibilities. When asked, “How important is the plan sponsor website to you in terms of your responsibilities as a plan sponsor?” over three-quarters of respondents (76%) stated that it is “very important” or “extremely important.” Unsurprisingly, in the response breakdowns by plan size, sponsors who administer plans in the $50 million – $200 million and $200 million – $1 billion ranges value the site the most, as these plans are large enough to warrant having full time staff dedicated to the plan, but often not large enough where relationship management teams at the recordkeeper may have created custom solutions that occur offline or on a dedicated sitelet.
With regards to satisfaction with the plan sponsor website, 83% of the sponsor survey respondents stated that they are either “satisfied” or “very satisfied” with their current plan sponsor website provided to them from their recordkeeper. Only 31% responded that they are “very satisfied” with the website, so there is still considerable room for improvement. Further, these satisfaction figures are lower than what we have seen in other financial services industries. Our 2016 survey of retail investors, for example, found that 91% of respondents are satisfied or very satisfied with their primary brokerage firms’ websites.
There are a multitude of improvement opportunities for leading recordkeepers regarding the digital capabilities they provide to plan sponsors. Corporate Insight’s DC Plan Sponsor Digital Audit benchmarks a recordkeeper’s plan sponsor website against those of its key competitors, with the primary goal of identifying key improvement opportunities and strategic recommendations that, if followed, would lead to a best-in-class digital experience. Using our proprietary Audit grading framework, we rate the plan sponsor site of the client and all selected competitors across over 100 individual attributes spanning six core categories: Education & Help Resources, Participant Data & Management, Plan Administration, Plan Information, Reporting and Website Design & Settings.
The audit framework, grade definitions and criteria are based on industry best practices we have identified from many years’ worth of research from our Retirement Plan Monitor – Institutional research services, which tracks and analyzes the plan sponsor websites of 15 leading recordkeepers. Recommendations are drawn from our Audit’s gap analysis, industry best practices and the digital preferences of plan sponsors, which were collected through our in-depth June 2019 Plan Sponsor Survey. Each firm receives a score on a scale of 1.00 (Poor) to 4.00 (Excellent). Our most recent audit of 11 major DC plan recordkeepers found that firms averaged a score of 2.81 out of 4.00, and only two firms received scores above the Good threshold of 3.0. By comparison, five out of 17 firms in a recent Brokerage Website Audit received Good grades (i.e., 3.00 or higher), and the leading firm earned a 3.43.
Our audit indicates that even leading DC plan recordkeepers have much work to do to deliver effective and intuitive digital experiences to plan sponsors. By providing stronger plan sponsor platforms, firms can greatly increase their standing during the RFP process and potentially win new plan business.
For more information about our DC Plan Sponsor Digital Audit, click here.