A reader comments, “Too often we get caught up in the complexities of financial wellness, etc. without improving the basics, such as the number of people who have even signed up for online access to their retirement account.” So, what do NAPA-Net readers think – and do?
Asked which measures of success they use in evaluating their practice, this week’s respondents listed:
89% - Increase(s) in deferral rates
78% - Participation rate
67% - Savings rate(s)
67% - % saving to full match
67% - Turnout at employee education
67% - Investment in QDIA/managed account/target-date fund
55% - Attendance at one-on-one advice/education sessions
43% - Projected income replacement rate
33% - Passing of non-discrimination tests (without adjustments)
33% - % saving a specific rate
33% - Individual outcomes
21% - Call center utilization
12% - Access to retirement plan balances/transaction/information
“We monitor beneficiary status and do an annual push for employees to validate,” explained one reader. “I have had two plans whose owners did not have current beneficiaries on file pass away this last year. We also track the small balances – we find that not all recordkeepers keep on top of the de minimis cashouts.”
Another reader mentioned, “Plan asset growth rates, average account balance, loan/hardship utilization, number of people who have never logged in to their retirement accounts, number of missing participants, fees paid by plan sponsors relative to services provided.”
“The primary measure of success that we use of our practice is client asset growth. And when we evaluate fees, we do not do so in a vacuum, but relative to services provided; a ‘value equation’ if you will,” commented one reader.
Shifting Scope(s)?
Now, for a third of this week’s respondents, those criteria hadn’t changed in the past two years. However, for more than 4 in 10 (44%), it had – and even for about 1 in 5 (22%), it had changed for some of their clients. “Missing participant count added, since they are the ultimate in unengaged!” explained one reader. “Plan asset growth vs. benchmark added as well.”
However, asked to pick a single, primary criterion, a considerable dispersion emerged, though the clear preferences were participation rate, the percentage saving a specific rate, and increase in deferral rates, with savings rate(s) a distant fourth.
Those, of course, are the measures NAPA-Net readers rely upon. Asked about the measures of success their plan sponsor clients use, the results were – well, actually they were pretty (though not totally) consistent:
100% - Participation rate
78% - Increase(s) in deferral rates
67% - Savings rate(s)
44% - % saving to full match
44% - % saving a specific rate
44% - Turnout at employee education
33% - Projected income replacement rate
22% - Passing of non-discrimination tests (without adjustments)
22% - Attendance at one-on-one advice/education sessions
11% - Call center rates
11% - Specific metrics by unit/location
11% - Individual outcomes
11% - Investment in QDIA/managed account/target-date fund
11% - Access to retirement plan balances/transaction/information
Plan Sponsor ‘Preferences’
However – asked what the metric most commonly used by plan sponsor clients in evaluating their services is, the dominant response was…
Fees.
That’s right – 44% of this week’s respondents noted fees, followed (distantly) by:
Participation rate - 22%
Savings rate(s) – 11%
There was, of course, the premise upon which the reader posed this week’s question – and so we asked: “What do you think about the notion that advisors have gotten so caught up in sweeping changes like financial wellness that they’re overlooking the basics?” As it turns out, about three-quarters (78%) saw it as “all being tied together,” though one in five (22%) thought that statement was “right on the money.”
“Retirement readiness sounds really good but there is no single measure to determine other than a funded ratio which assumes participants have a defined retirement budget and life expectancy,” noted one reader.
“As an industry, we need to do a better job of making sure participants and plan sponsors understand how important savings rates are. Merely receiving the match is usually not close to enough. It’s a starting point,” observed another.
“Every plan is different depending on if it is plan sponsor-centric or participant-centric,” noted another reader. “The common theme is participation rate because that will affect other metrics.”
Thanks to everyone who participated in this week’s NAPA-Net Reader Poll!
