401k Participants Not Satisfied With Recordkeeping and Investments

According to new research published by the SPARK Research Group, just fewer than half of 401k participants say they are "very satisfied" with the service providers who handle the recordkeeping and investments for their plans. Since 2000, satisfaction levels have declined in almost every service category with the biggest drop in investment satisfaction. Only 48% of participants said they were "very satisfied" with their plans overall, compared with 53% in 2000.

The study also noted that even with three years of declining markets, most participants are not planning to reduce contributions or completely discontinue participation in their 401k plans. "Despite the bleak investment environment, participants seem to still have faith in the long-run prospects for the stock market," said Cormier. "In fact, only one-in-eight believe the market will continue to decline in 2003."

"On the other hand, only 20% of participants say they are 'very satisfied' with investment performance, down from 42% in 2000," said Bob Wuelfing, the other co-chair of SPARK Research Group. "Interestingly, even in a good year like 2000, participants' level of satisfaction with the performance of their investment options was still low. We believe this is because participants always think someone else is getting better returns," he noted.

Wuelfing said that concern over investment performance was a reason behind the increase from 60% to 64% of participants who said it was "very important" for their employers to provide access to investment advice.

Background

The study is based on telephone interviews with 2,700 participants in 401k plans. It was conducted between December 2002 and January 2003. SPARK Research Group is a full service market research firm that deals with strategic and tactical issues.

Rick Meigs, Publisher, 401khelpcenter.com