Employee Retirement Plans: Preferences of Employers — Study


Why 91% of Employers Don’t Trust Banks to Manage Employee Retirement Plans



Trust is the No. 1 reason employers choose retirement plan providers for their employees, according to a landmark study of 809 companies across a full spectrum of industries in 2014. You’re not surprised are you?

But for the first time we learn which are the top three providers that companies trust the most, and that only 9 percent of employers trust financial institutions to manage their employees’ retirement plans.

ID-10066412 AmbroThe study, “Plan Sponsor Trust and Confidence Study,” was conducted by the National Association of Retirement Plan Participants (NARPP) with Stanford University.

The research also lists the five factors that erode trust between employers and the retirement plan providers.

“We know that employers are relying on financial institutions as partners in helping secure a financially stable future for their employees,” says NARPP Founder Laurie Rowley.

“For the first time this study provides plan sponsors with sound data and metrics on trust, confidence and accountability among leading retirement plan provider and these measures are critical when evaluating plan providers to partner with,” she adds.

Priorities — why employers pick plan providers

— Trustworthiness

— Participant customer service

— Quality of the customer experience

— Technology

— Education

— Administrative service

— Pricing

The study reveals a great deal of pessimism in about the trustworthiness of financial institutions in general, according to an NARPP press release.

Only one out of 11 employers, or 9 percent, indicate they can “always trust financial institutions to do the right thing for plan sponsors and participants,” says Ms. Rowley.

Factors that build or lead to erosion in trust of providers

— Accountability

— Incidence of problems in service

— Understanding of the employer’s needs

— Values the employer’s business

Sixty-five percent of plan sponsors say they can always trust their providers.

The three most-trusted plan providers

1) T. Rowe Price

2) Vanguard

3) Principal Financial

The study of employers included companies with plan assets ranging from $5 million to $250 million.

NARPP, narpp.org, is a San Francisco-based 501c3 nonprofit organization. The nonprofit says its mission is to provide transparent financial information for the 145 million working Americans saving for retirement.

From the Coach’s Corner, more articles on financial institutions:

Banks Have Credibility Issue with Affluent Women, Study — More than half of wealthy women are frustrated with their banks, according to a study. Here’s why and what can be done about it.

Management — Big Banks Provide Lessons in Succession Planning — Many businesspeople are so focused on operating their businesses, they forget about human capital –their most important asset. Organizations from small to large should strategically make a succession plan.

How Credit Unions, Small Banks Can Compete with Big Banks — Eight strategies for the underdog financial institutions. Moreover, big banks have a major trust gap with the average consumer, according to a study, which has created a marketing opportunity for credit unions and small banks. Years later, 78 percent of Americans still blame the big banks for the financial crisis way back in the Great Recession.

Major Banks Are Too Big to Fail, But Not to Break Them Up — The time has come to break up the big banks. There are 5,000+ banks in the U.S. However, just a dozen of them dominate with 69 percent of the assets in the banking sector. America grew strong as the result of a free-market system.

Security Steps for Your Mobile Device in Online Banking, Purchases — Almost 90 percent of Americans use a cell phone and more than 50 percent have smartphones, according to published reports. They also indicate 28 percent of smartphone owners use their devices for online banking.

“Banks are an almost irresistible attraction for that element of our society which seeks unearned money.”

-J. Edgar Hoover

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Photo courtesy of Ambro at www.freedigitalphotos.net

Banks Have Credibility Issue with Affluent Women, Study



More than half of wealthy women are frustrated with their banks, according to a study by Boston Consulting Group (BCG). The BCG study concludes 55 percent of respondents with a quarter of a million dollars in liquid assets believe they get poor service from banks.

The women customers complained in July 2010 about men getting more consideration, a higher level of counseling, and better value in financial terms.

Respondents also said they feel ignored by wealth managers in discussions in favor of their male partners, even when it’s made clear that they’re the decision-maker not the man.

Women also believe they get fewer favorable choices because bankers assume they have a low-risk tolerance.

The wealth manager issues are reminiscent of the car business. Even in the 1990s, car manufacturers such as Chevrolet installed vanity mirrors only in the visor above the passenger’s front seat. Salespeople would often only address the man when a couple was in the showroom. Women remember these issues from working up their career ladders.

“What banks need is a revolution like the automotive industry had,” said one wealthy woman, “to finally understand that women not only sit in the cars, but also choose, buy and drive them.”

It’s reported that women are responsible for a third of North America’s Indeed, women control (i.e., make the decisions) 33 percent of North America’s affluence. Their aggregate portion is $9 trillion.

Ostensibly, wealth managers don’t know how to communicate with women. In essence, women want to be treated equally and be apprised of services designed for them.

“This may seem contradictory,” BCG reports, “but the desire for a tailored approach is really a sign that women have distinct needs and expectations as clients.”

There are several reasons why women have different concerns; they range from the birth of a child to divorce.

Preferences of women include simpler financial statements and financial goals for the long term. And women want deals structured on a friendly relationship basis – empathy, tailored counsel and trust.

My sense is that wealth managers don’t have to panic in this $4.5 trillion+ marketplace. If they start the client process with a foundation using empathy and treating the woman client like it’s an event, they should do well.

Actually, that’s the same process I’d recommend for wealth managers with male clients. Simply put, wealth managers should do their homework, ask open-ended questions and be mindful of a woman’s perspective.

From the Coach’s Corner, see this portal’s Marketing/Sales category for strategies on successful sales and customer service.

“I wouldn’t have seen it if I hadn’t believed it.”

-Marshall McLuhan

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Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

Seattle business consultant Terry Corbell provides high-performance management services and strategies.