Even with all the attention the internet is receiving, it appears that defined contribution plan sponsors are unhappy with the Internet services of plan providers, according to a recent survey.
A survey of 700 plan sponsors conducted by the magazine "Plan Sponsor," found that they were most impressed with the range of investment options available. Timeliness of participant account reporting was close behind. But, sponsors were least impressed with Internet services and participant communication.
Over 100 plan providers were rated for the survey's Defined Contribution Honor Roll. Charles Schwab, Vanguard Group, Diversified Investments and T. Rowe Price were rated highest for their range of investment options. Charles Schwab and New York Life were rated highest for their Internet services.
Schwab received the hightest ratings in the greatest number of categories- it received top ratings in five of the eight categories-of the companies on the honor roll. It was evident from the survey that Schwab's range of investment options has a lot to do with plan participants' satisfaction.
"As they become savvier investors, defined contribution participants are demanding more options for their plans... Schwab is a clear standout in this category," the survey said.
While plan sponsors rated the range of investment options for all plans at 5.58 out of seven, Internet services received 4.09 points out of seven. On a scale from one to seven, seven equals excellent, and one equals poor.
According to respondents to the survey, the average number of investment options that plan sponsors offer is 10.5, up from 8.6 as found in the 1997 survey.
The survey said that while many companies are providing balance-inquiry capabilities on their websites, plan participants are hoping for more sophisticated services, such as allocation and deferral changing capabilities.
"Defined contribution providers have simply not been living up to their clients' expectations in this area, and clients are quick to point out the weakness... Schwab and New York Life seem to have delivered the best bang for the buck so far," the survey said.
The survey asked sponsors to rank four objectives of their educational programs. Just as in the 1997 survey, increasing participation was the number one priority.