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.

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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


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.

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