The Emergence and Future of Plan Health Tools

by on Mar 03, 2017

In our February Retirement Plan Monitor – Institutional Report, we cover the major enhancements made to the plan sponsor portals of our coverage group since the launch of our research service in January 2015. While multiple firms have made significant enhancements to websites, the most momentous and prevalent was the introduction of plan health tools. In 2015, Fidelity’s Executive Insights tool was the only plan-health-related tool available on a coverage firm’s plan sponsor site. Since then, four firms have added such tools: Principal, TIAA, Voya Financial and Wells Fargo. It’s fair to say that the emergence of these tools represents one of the most prominent trends within the digital plan sponsor arena over the past few years.

These comprehensive resources communicate crucial plan health data, such as plan participation rate, average employee salary deferral rate, number of employees eligible but not participating, and number of participants with appropriately allocated portfolios. The resources also include various retirement readiness metrics that allow sponsors to parse the data by different employee demographics. The tools often provide more holistic summaries of information and incorporate data visualizations, giving sponsors a more intuitive way to assess plan health than traditional reporting tools. Further, many allow sponsors to benchmark their plans against similar ones in terms of industry, number of participants, total assets and location to provide more context to the data. Notably, all four firms that have recently added plan health tools position key results directly on their homepages, allowing sponsors to view critical plan health metrics immediately upon login. However, all these tools also provide additional functionality that goes well beyond what is presented on the homepage.

Wells Fargo’s tool focuses more on communicating critical data points, and uniquely provides the number of participants whose salary deferral rates maximize the company’s matching policy. The other three firms’ tools emphasize retirement readiness figures. Voya’s tool, far and away the most robust, includes benchmarking capabilities as well as detailed scatterplots that allow sponsors to chart a variety of retirement data types across multiple employee demographics. Further, nearly all of the tool’s data is clickable, allowing users to drill down and view participant-level information across the board.

Wells Fargo Plan Metrics Tool (Truncated)

Voya Plan Health Tool – Details Screen

Given the relatively rapid and widespread emergence of these tools, and the level of investment firms have made in them, we believe that more and more firms will introduce such tools over the coming year. Further, we anticipate the firms that have already introduced plan health tools will continue to build out their capabilities. Currently, Principal’s tool includes a link to a video summarizing upcoming enhancements that will uniquely allow sponsors to model the impact of making changes to three variables—auto enroll salary deferral rate, auto escalate cap and company match—on participant retirement readiness and the company’s payroll. This kind of scenario modeling component represents the next step in the development of plan health tools, and we anticipate other leading recordkeepers will follow suit soon.

Principal Advanced Planning Video Stills