Providers Stepping Up Their Game; Sponsors Taking Note

Plan sponsor satisfaction with their retirement plan providers seems to be on the rise – and with justification, according to a new analysis.

The report, by Chatham Partners, says that their analysis of attributes that are highly correlated to overall satisfaction and loyalty suggests that plan sponsor loyalty and “promotability” have increased because retirement providers are improving at key aspects of service delivery, and plan sponsors are more confident in their providers’ efficacy in helping them meet their plan goals.

Correlation analysis indicates that attributes related to strong execution in service delivery are most highly correlated to overall satisfaction, while measures related to fees and investment services have a relatively lower impact. According to the report, areas with a high impact on overall satisfaction include:

  • quality of service delivered;
  • ease of doing business; and
  • providing solutions to assist plan sponsors in meeting plan goals.

Chatham notes that year-to-year scores have improved by at least 4 percentage points in each of these areas, including a 7 percentage point improvement in the scoring for “offers innovative solutions to plan objectives and goals.”

Firms that have the smallest proportion of “at-risk” relationships, have the highest scores for both “offers solutions to plan objectives and goals” (83%) and “helps participants reach goals” (77%). On the other hand, firms with the largest percentage of clients considered to be “at-risk” have much lower scores for these measures (63% and 64%, respectively), according to the analysis.

Chatham Partners’ annual Provider Loyalty Index, which measures satisfaction and loyalty among plan sponsors with decision-making authority for their organizations’ retirement plans, found that in 2016 81% of plan sponsors surveyed rated their overall satisfaction with their retirement service provider a ‘7’ or a ‘6’ on a 7-point scale.

This score is an increase of 4 percentage points relative to 2015 (77%). Furthermore, the percentage of plan sponsors who were classified as “loyal” using Chatham’s proprietary loyalty algorithm increased 4 percentage points, from 57% in 2015 to 61% in 2016, while the proportion of clients classified as “at-risk” decreased from 15% to 14%.

Plan sponsors are also more likely to actively endorse their retirement service providers in 2016. The industry-level Promotability Score improved 5 points from 48 to 53 in 2016, with 62% of plan sponsors considered to be “promoters,” and 9% considered “detractors.”

The Provider Loyalty Index is calculated based on insights from more than 11,000 plan sponsors.

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