DC plan sponsors value trustworthiness the most when considering a provider—even more so than fees, investment flexibility and product innovation. This and other findings are from Retirement Planscape®, an annual Cogent Syndicated™ study from Escalent, a top human behavior and analytics firm.
Trustworthiness is the single most important factor among Micro plans (plans with less than $5 million in DC plan assets). Dedication to helping participants reach retirement goals is also vital among Small-Mid plans ($5 million to less than $100M in plan assets) while Large-Mega plans (at least $100 million in plan assets) place the highest value on a provider’s ability to act in the best interest of plan participants.
“When asked to define trust in their own words, plan sponsors were quick to emphasize firms doing exactly what they pledge to do without shirking responsibility, owning up to errors, and showing a sincere commitment to clients regardless of asset size,” said Sonia Sharigian, senior product director at Escalent and author of the report. “To gain a seat at the consideration table, it really boils down to a provider’s ability to demonstrate superior client service, reliability, transparency and a desire to prioritize participants’ best interests above everything else.”
According to the report, the top five most trustworthy DC plan providers within each plan-size segment are:
|Micro DC Plans
|Small-Mid DC Plans
($5M to <$100M)
|Large-Mega DC Plans ($100M+)|
|1. Fidelity Investments||1. Fidelity Investments||1. Alight Solutions|
|2. Vanguard||2. Vanguard||2. Fidelity Investments|
|3. Charles Schwab||3. Charles Schwab||3. ADP Retirement Services|
|4. Empower Retirement||4. American Funds||4. Charles Schwab|
|5. Capital Group||5. Alight Solutions + Empower Retirement||5. Vanguard|
Source: Escalent. Cogent Syndicated. Retirement Planscape®. June 2019.
“DC plan sponsors are exhibiting a renewed sense of care on behalf of plan participants, from incorporating financial wellness programs to in-retirement income solutions. This sense of altruism is further reflected in the firms plan sponsors are looking to partner with,” said Linda York, senior vice president at Escalent. “This year, Fidelity, Vanguard and Charles Schwab enjoy a substantial competitive advantage in the DC recordkeeping business, stemming from their strong service capabilities, bundled benefits solutions and effective marketing initiatives.”
Cogent Syndicated, a division of Escalent, conducted an online survey of a representative cross section of 1,477 401(k) plan sponsors from February 20 to April 24, 2019. Plan sponsor survey participants were required to have shared or sole responsibility for plan design, administration or selection and evaluation of plan providers, or for evaluating and/or selecting investment managers/investment options for 401(k) plans. In determining the sampling frame for this study, Cogent relied upon ALM’s Judy Diamond Associates databases. To ensure the population for this research is representative of the universe of 401(k) plan sponsors, quotas were set during the data collection phase around key firmographic variables including total plan assets, number of plan participants, industry and geography. Minimal weighting was applied to adjust for purposeful deviations from the actual marketplace distribution. The data have a margin of error of ±2.55% at the 95% confidence level. Escalent will supply the exact wording of any survey question upon request.
Click below for more on the full Retirement Planscape report.