Since 2000, the Boston Research Group’s DCP studies have been measuring plan sponsors’ loyalty and satisfaction with their record keepers and advisors (i.e., providers). The Number 1 driver of overall satisfaction is the provider’s ability to demonstrate that the value they deliver is well worth the fees and other costs. Importantly, loyalty is also highly correlated with value.
But how does a provider demonstrate value? Multivariate analysis of 2013 DCP data provides a very clear answer. There are two categories of factors. The first is related to the client’s experience. The second is focused on the quality of products and services within specific channels.
In this first installment of a two-part discussion, let’s look at the client experience factor. In the second part, we’ll look at how service excellence creates value.
Which Customer Experience Creates the Greatest Value?
Here are the specific customer experience elements, in order of impact, that create a perception of value in the plan sponsor’s mind:
• Minimizing the administrative burden and complexities related to administering the DC plan
• Partnering effectively with the plan sponsor to meet the challenges of administering the plan
• Understanding the needs of plan sponsor’s firm and its employee population
• Having the resources necessary to offer the best DC plan no matter how big or complicated the plan becomes
• Ensuring that the plan sponsor is meeting its fiduciary responsibilities
• Offering the latest and best 401(k) technology
• Helping participants reach their financial goals for retirement effectively
Looking at all of these elements, one can see two clear themes. First, value is created through partnering with the plan sponsor. By partnering, I mean being on the plan sponsor’s side, anticipating their needs and their participants’ needs and proactively finding ways to meet them.
Interestingly, plan sponsors who do not perceive value repeatedly complain that their record keepers “nickel and dime” them and never deliver on promises proactively. The definition of a “value failure” is taking action to do what was promised only after being asked to do so by the plan sponsor.
The second theme is related to assuring the plan sponsor they are in good hands with you at the helm. Specifically, a perception of value for the dollar is created by the provider’s engendering confidence in the plan sponsor that it has the technical capabilities to ensure that the plan’s operational needs will always be met and that the plan is always operating in fiduciary compliance.
Warren Cormier is President and CEO of Boston Research Group and author of the DCP suite of satisfaction and loyalty studies. He also is co-founder of the Rand Behavioral Finance Forum, along with Dr. Shlomo Benartzi.