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In Practice July 16, 2008
Providers Unsuccessful at Retaining DC Plan Assets
Despite the increased focus on the need to capture Baby Boomers’ assets post-retirement, defined contribution plan service providers are largely unsuccessful at retaining participant assets after retirement, according to research from the Diversified Services Group (DSG).
Reported by Rebecca Moore
A DSG press release said this is due to insufficient focus on the retention issue, the inability to reach the plan participant at the appropriate time, and failure to build a relationship with the participant prior to retirement. The research also found that plan service providers miss opportunities to aggregate all of a plan participant’s assets at the point of retirement.
The majority of plan sponsors responding to the research indicated they do not care whether or not their participants take assets out of DC plans at the time of retirement, and more than 80% of participants from the companies interviewed do take their assets at retirement.
“Since the majority of the firms we interviewed lost between $500 million and $4 billion of defined contribution plan assets last year, it is certainly valuable to explore the intricate interactions and relationships between the plan provider and the plan sponsor and what initiatives can be taken to retain a significant portion of these assets and client relationships,” said James Sholder, a DSG Principal of its Retirement Market Practice, in the release.
The research showed that education at the worksite continues to be mostly focused on asset accumulation rather than creating retirement income.
The syndicated research study, Capturing and Retaining Rollover Assets at the Retirement Inflexion Point, includes findings of two separate, but complementary, research efforts: in-depth executive interviews of defined contribution retirement plan providers and retirement plan sponsors.