Anxious retirement savers turn digital experience into new battleground: J.D. Power

Already stressed retirement savers are becoming increasingly annoyed by the digital experience provided by their plans.

Overall satisfaction with their retirement plans' websites and apps fell 12 points — on a 1,000-point scale — this year, as 53% of retirement plan investors are now classified as “financially unhealthy,” according to the J.D. Power 2022 U.S. Retirement Plan Digital Experience Study, released Thursday. Not helping their current emotional or financial status is the fact that 63% of the survey’s respondents say they have challenges managing their accounts digitally.

“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. Unfortunately, many are not finding what they need and end up having to call customer service for help,” Mike Foy, senior director and head of wealth intelligence at J.D. Power, said in a statement.

That said, Foy believes the current dissatisfaction offers retirement plan advisers an opportunity to strengthen their relationship with investors, saying that if 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.”

“As we’re on the precipice of the largest percentage of retirees ever in our history, coupled with advances in health care, it is more paramount than ever to provide simple, clean and transparent reporting of financial assets to help retirees with income planning respective to their longevity. Providing a transparent digital experience that aggregates various assets into one place also allows an investor to easily understand and manage their financial assets,” said Thomas Melburn, chief investment officer of Cardinal Capital Partners at Kingswood U.S.

In terms of investors' overall financial health, the study found the portion of retirement investors classified as “financially healthy” plunged to 47% from 60% during the past year, with more than one-fourth (28%) of investors now falling into the “financially vulnerable” category. At the same time as that deterioration in financial health, the study showed overall satisfaction with retirement plans' digital experience dropped.

The J.D. Power survey also illustrated how the digital experience has evolved into the new battleground for customer retention. For example, 50% of investors who use the top digital performers say they “definitely will” keep their assets with their current provider in the event of a job change, versus 17% of investors with low-performing firms. Considering the job-hopping nature of millennial and Gen Z employees, retaining investors through employment changes has already become a top priority for retirement plans.

As for what makes customers happy, satisfaction with retirement plan digital experiences rises 191 points to 671 when participants can complete tasks by themselves on their plan’s website or mobile app, according to the study. Along those lines, overall customer satisfaction rises 178 points when investors believe the retirement plan websites and apps offer proactive guidance and help.

“Having the ability to convey to clients the information relevant to their long-term investment goals is more important than ever," Melburn said. "Too much emphasis on headlines can be overwhelming. Providing specific guidelines relating to an investors’ options in Social Security strategy, retirement income planning and overall IRA/401k account strategies help investors understand the various alternatives available to them.”