Drivers of Client Satisfaction in Retirement Markets

Transcription

1 Drivers of Client Satisfaction in Retirement Markets Embracing Retention as a Driver of Growth Providing Actionable Market Research to the World s Leading Financial Services Firms

2 Introduction to Chatham Partners Your hosts: Peter Starr President and CEO Joshua Dietch Managing Director Firm overview: Chatham Partners provides customized market research and strategy consulting services that help its retirement services, institutional investment management, and global securities services clients understand the explicit, implicit, and latent needs of clients and prospects. Our fact-based analysis and recommendations enable organizations to improve sales processes, client service / retention, product / service offerings, and market perceptions. Representative retirement services clients: ADP Retirement Services, Bank of America Merrill Lynch, Diversified Investment Advisors, First Mercantile Trust Company, Fidelity Investments, ING, John Hancock, JPMorgan RPS, Lincoln Financial, MassMutual, Mercer, MetLife Resources, Nationwide Financial, Principal Financial Group, Prudential Retirement Services, Transamerica Retirement Services, T. Rowe Price Retirement Plan Services, TIAA-CREF, Wells Fargo 2

3 What We Will Cover Today Introduction What Drives Plan Sponsor Satisfaction, Dissatisfaction, and Departures? How do you improve client experience? What you stand to gain by capturing the Voice of the Customer 3

4 Data Elements for Today s Discussion Plan Sponsor Satisfaction Data- collected by Chatham Partners, through in-depth client satisfaction studies within the retirement services industry. These findings include aggregated feedback from plan sponsors about 21 providers, including 9 of the top 10 firms (ranked by Defined Contribution plans record kept), and representing 60% of Defined Contribution plans. Quantitative questions are rated on a 7-point scale: Very Satisfied Very dissatisfied N/A Customer Loyalty Data- measured using a proprietary algorithm which analyzes the answers to key survey questions, categorizing responding organizations as either loyal, favorable, or at-risk. Chatham follows up with at-risk clients by conducting in-depth telephone interviews to probe for sources of dissatisfaction within the relationship. The transcripts of these interviews are aggregated and analyzed, exposing key areas in which providers can seek to improve and ultimately salvage client relationships. Net Promoter Scores are based on a 0 to 10 scale and represent clients likelihood of recommending the provider to other plan sponsors (10 = very likely, 0 = very unlikely). Based on these scores, respondents are categorized as Promoters (9-10 rating), Passives (7-8), or Detractors (0-6). Net Promoter Score = % Promoters - % Detractors 4

5 Where is the Industry today?

6 2010 Industry Results Overall Satisfaction Loyalty Net Promoter Top 2 Box Rating (%7,6) 7,6 69% Loyal 51% Promoter 56% 5,4 Favorable Passive 3 At-Risk 28% Detractor 29% 3% 28% 21% 14% 6

7 2010 Industry Results Overall Satisfaction Top Performer Low Performer Loyalty Top Performer Low Performer Net Promoter Top Performer Low Performer Top 2 Box Rating (%7,6) 7,6 5,4 84% 49% Loyal Favorable 70% 41% 26% Promoter Passive 66% 26% 40% 3 2% 14% 39% 12% At-Risk 25% 5% 32% Detractor 25% 9% 35% 7

8 What Drives Plan Sponsor Satisfaction, Dissatisfaction, and Departures?

9 Plan sponsor services and personnel are the dominant drivers of client satisfaction Relative Impact on Overall Satisfaction with Provider* Influential Sub-attributes Plan Sponsor Services 6.0 Average Score 52% Impact Response to legal / compliance issues Informs of fiduciary responsibility Informs of regulatory changes Timeliness of plan reports Personnel % Impact Overall Sat. Relationship Manager Problem Resolution Skills - Relationship Manager Overall Sat. Client Service Rep Investment Services % Impact Investment review process Effectiveness of due diligence Appropriate fund info Performance relative to benchmark Participant Services % Impact Overall sat. Enrollment meetings Overall sat. Participant website Education achieves plan goals Overall sat. Phone reps Note: Leverage analysis examines the correlation between the overall satisfaction ratings for the provider and the satisfaction scores for product and service components. It indicates which variables might be leveraged to increase client satisfaction and their relative impact on overall provider satisfaction. * Drivers are based on a multiple linear stepwise regression model. Percentages represent the standardized beta coefficients divided by the sum of the coefficients. 9

10 Personnel and poor service are the most common reasons for client dissatisfaction % Mentions as Top Reasons for Dissatisfaction Client Service / Personnel (Service / personnel not responsive, lack of proactive contact, excessive employee turnover, limited product / plan knowledge, inadequate problem resolution) 54% Plan Sponsor Services (Poor legal / compliance support, inadequate plan sponsor training, website / reporting, processing / recordkeeping errors, 5500 / nondiscrimination testing issues, administrative burden not eased) 50% Participant Services (Lack of on-site meetings, poor content / delivery of presentation, call center reps provide inaccurate information, educational materials inadequate / not targeted to audience) 39% Investment Services (Poor performance, narrow range of investment options / funds, no investment reviews, limited investment advice / support, proprietary fund requirements) Technology (Plan sponsor and participant websites not user friendly / easy to navigate, inaccurate information, formatting of reports is cumbersome) Fees (Total cost too high / not competitive, structure lacks transparency, investment / admin fees, poor value for fees paid ) 24% 26% 29% 10

11 Service-related missteps are the most frequent reasons for client departures 100% 90% 80% 70% % of Departures Source of Dissatisfaction Typical Symptom 22% 19% Plan Sponsor Services Client Service / Personnel Desire to decrease administrative burden Lack of plan sponsor training / support Processing / recordkeeping errors Not kept informed of fiduciary responsibilities Lack of proactive contact Sub-par responsiveness to service requests Limited dedicated service personnel 60% 50% 40% 30% 17% 15% Fees Investment Services High cost relative to competition Fee structure lacks transparency Failure to explain / account for fee increases Poor value for fees paid Underperformance of funds Proprietary fund requirements Limited range of investment options 20% 14% Participant Services Desire for more frequent onsite education Call center reps lack plan knowledge p provide inaccurate information 10% 0% 13% Other Technology / reporting Processing employee transactions Merger / plan consolidation 11

12 How do you improve client experience?

13 Four cornerstones of client experience Plan sponsor services Client service and relationship management Plan investments Participant servicing 13

14 Correlation with overall satisfaction with plan sponsor services Correlation Coefficients 0% 20% 40% 60% 80% 100% Responsiveness to legal/compliance issues Informs of fiduciary responsibilities Value added Informs of regulatory changes Processing of employee transactions Timeliness of plan reports Clarity of plan reports Accuracy of plan reports Helps fulfill fiduciary responsibilities Reduces administrative burden Plan sponsor website Provides user friendly reporting Compliance/nondiscrimination testing Form 5500 reporting Expectation 14

15 Plan sponsor services Benchmark comparisons Comparing High Performers and Low Performers to Chatham s Proprietary Benchmark: 7.0 Plan Sponsor Services Average score (1-7) Overall sat. w/ plan sponsor services Reduces administrative burden Plan sponsor website Timeliness of plan reports Processing of employee transactions Informs of fiduciary responsibilities Accuracy of plan reports Helps fulfill fiduciary responsibilities Clarity of plan reports Compliance/ nondiscrimination testing Provides user friendly reporting Informs of regulatory changes Responsiveness to legal/ compliance issues Form 5500 reporting Top Performer Benchmark Low Performer 15

16 Plan sponsor services Key takeaways The perception of value comes from value added services Providing consultative capabilities is an effective means of demonstrating partnership between provider and client Understand sponsors risk averse nature Plan sponsors are looking to their providers for education regarding their role as a plan fiduciary and plan governance best practices Make their day to day lives easier Sharing of administrative best practices is quickly becoming a baseline requirement for demonstrating value as a provider The message is the medium Reporting and plan data should be easy to access, presented in a clear and intuitive manner, and, most importantly, be actionable 16

17 Correlation with overall satisfaction with client service and relationship management Correlation Coefficients 0% 20% 40% 60% 80% Ease of doing business with Value added Treats me as an important client Relationship manager Problem resolution skills Proactive approach Plan Knowledge Frequency of contact Flexible in meeting my unique needs Accessibility Responsiveness Provides value added recommendations Expectation 17

18 Client service and relationship management Benchmark comparisons Comparing High Performers and Low Performers to Chatham s Proprietary Benchmark: 7.0 Client Service Average score (1-7) Overall sat. w/ Personnel Plan knowledge Ease of doing business with Frequency of contact Treats me as an important client Flexible in meeting my unique needs Provides value added recommendations Relationship manager Accessibility Problem resolution skills Responsiveness Proactive approach Top Performer Benchmark Low Performer 18

19 Client service and relationship management Key takeaways A plan for success The creation of an annual service blueprint for plan activities is critical to setting client expectations, measuring results, and moving forward Accountability is crucial Establish clear roles and responsibilities in all interactions with clients Internal silos are irrelevant to clients Identify and eliminate the seams in your service delivery model Take service to your clients don t make them exact it from you Value is a created perception Constantly reinforce the concept of the value of your services to your clients 19

20 Correlation with overall satisfaction with investment services Correlation Coefficients 0% 20% 40% 60% 80% 100% Investment review process Value added Effectiveness of due diligence Providing appropriate fund information Reputation/name recognition of managers Performance relative to benchmark Range/breadth of investment options Investment fees Expectation 20

21 Investment services Benchmark comparisons Comparing High Performers and Low Performers to Chatham s Proprietary Benchmark: 7.0 Investment Services Average score (1-7) Overall sat. w/ Investment svcs. Performance relative to benchmark Reputation/name recognition of managers Range/breadth of investment options Providing appropriate fund information Investment fees Effectiveness of due diligence Investment review process Top Performer Benchmark Low Performer 21

22 Investment services Key takeaways Tell clients what they need to know The perception of your investment capabilities is largely tied to successfully executing an annual investment review Prudence is process... Help clients fulfill their duties as plan fiduciaries by informing them of how and why an investment option is appropriate for their plan Keep the elephant in the room Heightened fiduciary awareness makes it critical that the perception of investment fees is not left unmanaged Sharing of information and insight is essential The informational needs of clients are not point-in-time transactions, informational needs and insight need to be met throughout the year 22

23 Correlation with overall satisfaction with participant services Correlation Coefficients 0% 20% 40% 60% 80% 100% Employee education helps achieve plan goals Variety of educational tools Value added Phone representatives Accurate responses to inquiries Participant website Participant statements Voice response system Ease of participant website navigation and use Accuracy of participant statements Participant website retirement planning tools Employee education Full range of services Expectation 23

24 Participant services Benchmark comparisons Comparing High Performers and Low Performers to Chatham s Proprietary Benchmark: 7.0 Participant Services Average score (1-7) Overall sat. w/ participant services Accurate response to inquiries Phone representatives Variety of educational tools Participant website Ease of participant website navigation and use Participant website retirement planning tools Employee education helps achieve plan goals Employee education Top Performer Benchmark Low Performer Voice response system Participant statements Full range of services Accuracy of participant statements 24

25 Participant services Key takeaways It s all about outcomes The success of participant services is viewed almost entirely on the outcomes they achieve You are the only thing standing between the participant and HR s door Untimely and inaccurate servicing of participants, whatever the magnitude, turns good references into bad references Take the leap Delivery of participant advice is critical to delivering outcomes Don t turn off the VRU just yet Like the rotary telephone, legacy participant support mechanisms such as paper-based transactions or VRUs will continue to be required 25

26 What you stand to gain by capturing the Voice of the Customer

27 Benefits of Voice of the Customer research Discover clients perceptions of key strengths, weaknesses, and gaps in your product and service offerings Identify statistically predictive drivers of client satisfaction and loyalty Measure the efficacy of new initiatives against internal and external benchmarks Identify and triage accounts that are at risk of departure Demonstrate that the voice of the client is being incorporated into the making of business decisions and last, and most importantly, lower client attrition 27

28 A real world example of the impact of Voice of the Customer research The Problem Low client satisfaction and loyalty Key Measures Loyalty = 48% Overall Satisfaction = 56%* Provides Good Value for the Money = 64%* Plan to Continue = 75% At-Risk Accounts = 21% Attrition = 11% The Solution Client implements client satisfaction and departed client programs The Results Dramatic improvement! Key Measures Loyalty = 75% Overall Satisfaction = 65%* Provides Good Value for the Money = 78%* Plan to Continue = 97% At-Risk Accounts = 13% Attrition = 7% Financial Impact of Client Retention Programs Accretive Nature of Client Retention 12 $ MM Reducing attrition from 11% to 7% results in a cumulative $10.4 MM gain over 5 years! Annual Impact Cumulative Impact * Percentage of clients who rated an attribute a 6 or 7 on a 1-7 scale; 6 or 7 indicates Very Satisfied. 28

29 Chatham clients exceed industry benchmarks for client satisfaction 6.0 Average score (1-7) 5.6 Chatham Clients Industry Benchmark 29

30 loyalty Chatham Clients Industry Benchmark Loyal Favorable 61% 45% At-Risk 26% 13% 30% 25% 30

31 and Net Promoter* Net Promoter Score** 47% 28% Promoter Passive 59% 49% Detractor 29% 31% 12% Chatham Clients 21% Industry Benchmark * Net Promoter Scores represent clients likelihood of recommending their provider to other plan sponsors (10 = very likely, 0 = very unlikely). Respondents are categorized as Promoters (9-10 rating), Passives (7-8), or Detractors (0-6). ** Net Promoter Score = % Promoters - % Detractors. 31

32 A playbook for client retention Steps to identify the Voice of the Customer Identify key elements of service delivery Measurement Review Follow-through Personnel Utilize a appropriate methodology Analyze the data Socialize the results Functional areas Validate the impact of new initiatives Affirmation of value propositions Make it easy for clients to respond Ensure the results are representative of all clients Segment the results Identify key trends Create teams to tackle key initiatives Measure year-over-year results to measure impact of effort 32

33 Thank you and questions Peter Starr Joshua Dietch This material is copyright 2011 by Chatham Partners and may not be distributed without their written permission. Please note that this session is being recorded for playback. All other company, organization, product or service names referenced herein may be trademarks of their respective owners. The information and opinions provided have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information herein is intended for general informational use only. 33