Economists may still be debating whether the U.S. is in a recession, but ask retirement investors what they think and they’ll tell you their financial health is deteriorating, and they’re concerned about their investments. Adding to the misery, they’re not finding the help they need when they turn to their plan’s websites and apps.
New research from J.D. Power finds that deteriorating financial health sours digital experience. During the past year, the percentage of retirement investors classified as financially healthy plummeted from 60% to 47%, with 28% of investors now falling into the financially vulnerable category.
J.D. Power measures a consumer’s financial health as a metric that combines his or her spending/savings ratio, creditworthiness and safety net items such as insurance coverage, and places the consumer on a continuum from healthy to vulnerable.
Overall satisfaction with retirement plan digital experience fell 12 points (on a 1,000-point scale), in lockstep with the deterioration in financial health, according to the research.
“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,” Mike Foy, senior director and head of wealth intelligence at J.D. Power, said in a statement. “Unfortunately, many are not finding what they need and end up having to call customer service for help.”
For plan providers, this is a moment-of-truth opportunity, 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.”
What Top Digital Performers Do Differently
The J.D. Power study found that strong digital performance is highly correlated with retirement investor asset acquisition and retention. Among top digital performers, 50% of investors said they definitely will keep their assets with their current provider in the event of a job change, compared with 17% of investors with low-performing firms.
With average job tenure for millennials and members of Generation Z now hovering below three years, retaining investors through employment changes has become a top priority for retirement plans.
But retirement plans are missing the mark on digital account management, the study found. Overall customer satisfaction with retirement plan digital experience rises 191 points to 671 when participants can complete tasks by themselves on their plan’s website or mobile app.
However, only 37% of investors said they can manage their accounts digitally without contacting customer service.
Retirement plans are also missing out on huge upside potential in another key area. Overall customer satisfaction rises 178 points when investors believe retirement plan websites and apps offer proactive guidance and help, yet just 22% of firms evaluated are meeting this key performance indicator.
See the charts below for the digital providers with the highest and the lowest satisfaction among retirement plan investors.