42 Million People Do Not Know They Are Paying Any Fees On Their Workplace Retirement Plans

$35 Billion Dollars, The Estimated Amount Of Fees This Group Is Paying

SAN FRANCISCO, Jun. 2, 2015 /PRNewswire-iReach/ -- Today, NARPP (The National Association of Retirement Plan Participants) announced new findings from their comprehensive retirement plan participant study that includes new data on what people know and don't know about fees they are paying for their retirement savings.

The research conducted in April of 2015 reveals that 58% of working Americans don't know they are paying fees on their workplace retirement savings accounts. NARPP estimates the amount of fees generated off of this group of investors is around $35 billion dollars a year or roughly $835 per investor*.  For those people who do know they are paying fees, only one-in-four (26%) could accurately answer how the fees are calculated. 

"It is imperative that investors understand the fees they are paying and the risks associated with high fees," says NARPP Co-Founder Laurie Rowley, "investors are essentially acting as their own pension managers and the consequences of not knowing fee information can have a profound and irreversible impact on a lifetime of savings".

The study also identifies a strong link between transparent fee information and the level of trust that participants have in their respective service providers.  "I think the message is clear for service providers -- if you want to gain the trust and loyalty of your customers, you have to do a better job at providing clear and transparent information on fees," says Laurie Rowley, "transparency increases trust, and trust is the key to engagement".

Investors' level of satisfaction with their respective service providers' education programs remains unchanged, at just 38%. However, there is a wide range of scores on education satisfaction when you look at specific providers with a high score at 51% and a low of just 17%.

NARPP has identified the factors that are most important to investors when evaluating the efficacy of their service providers' education program.

Investors highly value:

  1. Information that is always presented in their best interest
  2. Understanding the basics of investing
  3. Fee information is presented in a way that is easy to understand
  4. A high level of trust with their service provider
  5. Assistance meeting their long-term savings goals

"If we are going to improve outcomes and engagement with retirement savings, service providers need to radically change the way they are communicating with and educating their participants," says Warren Cormier, Chief Behavioral Officer at NARPP.

New to the study in 2015, investors were asked how useful they would find a standardized fee label on all retirement funds, akin to a nutrition label on foods. The results show an overwhelming majority of investors, 81%, would find the label helpful. The same question was asked in NARPP's Plan Sponsor Study and the results show a similar result, with nearly three out of four sponsors agreeing that the label would be helpful to their employees.

Currently the Top 10 performers in education are:

  1. Charles Schwab
  2. Bank of America/Merrill Lynch
  3. Wells Fargo
  4. Vanguard
  5. Fidelity, Empower (tied)
  6. Prudential
  7. John Hancock
  8. T. Rowe Price, TIAA-CREF (tied)

About the Study

The data were collected in April 2015, by an online panel and include the responses from 4,368 active participants. The list was drawn from a random sample. Service providers did not submit client lists. All profiled providers have a statistically valid sample. Those providers who did not have enough interviews were not profiled in the study, but their data is included in the averages. The study was designed by NARPP, Warren Cormier of Boston Research Technologies, and Professors from Stanford University. 

About NARPP

NARPP (The National Association of Retirement Plan Participants) is a San Francisco-based 501(c)(3) nonprofit organization whose mission is to advocate for individual savers. Through pioneering research, independent coalition building, and innovative educational programs, NARPP is making financial information transparent and universally accessible for the 145 million working Americans saving for retirement. www.NARPP.org

*73 million Americans participating in workplace retirement plans (DOL). 42 million is 58% of total. Average 401k balance $91,800 (Fidelity 5/1/15). Average 401k fees vary by size of employer and other factors; NARPP used the average of 0.91 (Brightscope/ICI December 2014 Report). 

Media Contact: Laurie Rowley, NARPP, The National Association of Retirement Plan Participants, 415-509-9687, Laurie.Rowley@NARPP.org

News distributed by PR Newswire iReach: https://ireach.prnewswire.com

SOURCE NARPP



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