In the 21st century, it should be easy to manage your 401(k) online. But according to a new study, most customers are finding it almost impossible to do so.
The research group J.D. Power
The full list can be found at the end of this article.
The results were concerning. Only 22% of investors said the sites and apps gave proactive guidance, and just 37% of users said they could complete digital tasks without calling up customer service.
"A lot of these providers have built tools, educational content and calculators and so on, but there's a whole lot of folks who either aren't aware of those or just have never used them," said Mike Foy, head of wealth intelligence at J.D. Power.
Employer-sponsored retirement plans are
The J.D. Power study ranked 22 different plan providers in terms of their customers' digital experience, awarding a score for each firm on a 1,000-point scale — but no one got close to 1,000. The top score was 704, held by both Bank of America and Charles Schwab. Prudential Financial was next with a score of 696, followed by Fidelity Investments with 690.
At the low end, Alight Solutions came in last with a score of 593, followed by Voya Financial with 619 and Paychex with 632. The average score was a lackluster 663.
"Retirement investors are under a great deal of financial stress right now, and they are looking to their plan's websites and apps for information and guidance," Foy said. "Unfortunately, many are not finding what they need and end up having to call customer service for help."
Upside potential
Foy pointed out that part of the dissatisfaction stemmed from a broader feeling of financial stress due to the recent volatility of the stock market, inflation and other economic concerns. But not every problem could be chalked up to the economy, which in a way is good news for the firms — because it means there are some factors they can control.
"This is a moment-of-truth opportunity for plan providers," Foy said. "When they get the digital experience right, they see a very significant lift in the likelihood to grow and retain participant assets long after they have left their current employer."
For example, mobile apps were by far the most popular of the digital interfaces. The trouble is few people use them — only 22% of investors said they had used their provider's app in the last 12 months. Getting more customers to download these apps could make a huge difference for plan providers.
"The mobile app is the least used and has the highest satisfaction," Foy said.
Another area of opportunity is in making the apps and websites more user-friendly. Customers' satisfaction rose 178 points when they felt the digital channels gave proactive guidance, and jumped 191 points when users could complete tasks on their own.
In some cases, improving these factors could just require a few design tweaks. Customers found apps easier to use when they put the most sought-after information — for example, their account balances — in highly prominent, visible places. And to do better on proactive guidance, apps can prompt users with alerts when they need to take action — for example, if they need to increase their contribution level or tweak their asset allocation off.
New technologies can help as well. Bank of America earned its top score partly thanks to Erica, its "virtual financial assistant." Like Siri or Alexa, Erica is a voice-activated program that literally listens to customers and tells them what they need to know.
"Instead of having to click through five or six links … through a single voice command, you can immediately uncover the information that you're looking for," Foy said.
Rising expectations
Some of these high-tech features may seem out of character for the retirement industry, which — fairly or unfairly — has a reputation for being old-fashioned. But these days, customers increasingly expect them.
"The retirement industry, and the financial services industry in general, is not really known as a digital innovator," Foy said. "Meanwhile, the experiences that consumers are having with other brands — whether it's Amazon or Netflix or Google — they're having better and better experiences, and that really raises the bar."
And a smooth digital experience isn't just good for customers. It also improves the reputations of both plan providers and the employers that work with them, Foy said. Not only that, but when customers can digitally manage their plans on their own, firms can rely less on customer service call centers, which can be very expensive.
"It's a win-win," Foy said. "It's an important driver of a better experience for the participant, and it's also a win for the provider."
J.D. Power's 2022 U.S. Retirement Plan Digital Experience Ranking:
22. Alight Solutions (593)
21. Voya Financial (619)
20. Paychex (632)
19. John Hancock (633)
18. Transamerica (638)
17. Equitable (648)
16. Empower Retirement (648)
15. ADP Retirement Services (651)
14. Principal Financial Group (652)
13. AIG Retirement Services (653)
12. Lincoln Financial Group (658)
11. Vanguard (663)
10. TIAA (666)
9. Nationwide (672)
8. MissionSquare Retirement (672)
7. Ascensus (677)
6. Capital Group/American Funds (679)
5. T. Rowe Price (689)
4. Fidelity Investments (690)
3. Prudential Financial (696)
2. Charles Schwab (704)
1. Bank of America (704)
