SOURCE: BMO Global Asset Management

BMO Global Asset Management

July 17, 2013 09:00 ET

BMO Retirement Services Survey: Plan Sponsors Report Fee Disclosure Increases Having Little Impact on 401(k) Participants

CHICAGO, IL--(Marketwired - Jul 17, 2013) -

  • Client loyalty: BMO Retirement Services continues to earn "Star Performer" designation
  • Plan sponsors want income solutions that are easy for them to implement and easy for participants to understand
  • Eighty percent of plan sponsors report mandated fee disclosure changes have had little to no impact on how participants engage with their 401(k) plan

According to a client survey of 416 plan sponsors conducted by BMO Retirement Services, new fee disclosure regulations implemented last year have had a negligible effect on workers participating in employee-sponsored retirement plans.

According to the survey released today, 80 percent of employers reported that the new rules mandating full disclosure of retirement plan fees and expenses have had little or no impact on their plan participants. This disclosure was introduced by the Department of Labor's Employee Benefits Security Administration in early 2012.

Most notably, plan sponsors believe the added regulations -- designed to educate American workers and help them more prudently contribute to their 401(k) retirement plans -- did not change participant behavior or their perception of their retirement savings benefit. In fact, only one percent of plan sponsors participating in the survey reported seeing positive or negative changes in participant behavior. Similarly, just one percent of respondents felt an increase in ill will toward either themselves or the plan's recordkeeper.

Curiously, most plan sponsors believe that this increased disclosure has not added to participant confusion. According to the survey, only 15 percent of plan sponsors see this disclosure as confusing to their participants. In contrast, 46 percent expressed this concern shortly after last year's regulatory changes took effect.

When asked when they expect older plan participants to retire, more than one-third (36 percent) of the plan sponsors surveyed believe that the Baby Boomers enrolled in their company retirement plans will work past the age of 65. Interestingly, 41 percent expect this will have a positive impact on their companies, compared to only four percent who felt the impact would be negative.

"People are living longer than they did decades ago so it is not surprising that such a large number of our plan sponsors believe that their employees will be working well into their 60s," said Matt Smith, Managing Director, BMO Retirement Services. "This bodes well for employers who wish to hold on to employees with valuable knowledge and experience. It also bodes well for workers who want to work longer. Working keeps people vibrant and young, so if you're happy and healthy and enjoy your job, why retire?"

Plan Sponsors Crave Straightforward Solutions
The survey also identified key attributes that plan sponsors look for when considering adding a retirement income solution to their company's defined contribution plan:

  • Three-quarters (74 percent) of plan sponsors want solutions that are easy for their plan participants to understand.
  • More than one-quarter (26 percent) want solutions that are not too complex to manage as a plan sponsor.

"Plan sponsors take their fiduciary responsibilities to their employees very seriously, which is why BMO Retirement Services is committed to providing both employers and employees with proven solutions for achieving retirement security," said Smith. "The retirement income products that are currently available have a difficult time meeting this standard."

"Ease of use has been one of the keys to the success of target-date funds and risked-based asset allocation funds," Smith added. "Both are easy for plan participants to use and easy for plan sponsors to add to existing plans. Both are user-friendly investment solutions, providing fully diversified portfolios based on the participant's retirement date or their risk tolerance. After all, simplicity is the ultimate sophistication."

BMO Retirement Services Retains Position as Star Performer
BMO Retirement Services also announced that it earned a 63 Net Promoter Score, which is a client loyalty metric introduced in the Harvard Business Review in 2003. Based on feedback within this survey, their score once again placed BMO Retirement Services within the "Star Performer" range and among the highest in the industry.

"Our solid Net Promoter Score validates our commitment to service excellence and confirms the value we place on our clients and on the relationships we have with them. We are particularly proud of this rating because it is based on our clients' responses," concluded Smith.

About BMO Retirement Services
BMO Retirement Services is an integral part of BMO Global Asset Management and a premier, award-winning provider of retirement services. We have been recognized as a national provider of both defined contribution recordkeeping and defined contribution investment-only services by the National Association of Plan Advisors.

BMO Global Asset Management provides holistic, solution-driven services to our institutional and high-net-worth clients. With a 40-year legacy of fiduciary service -- and goal of promoting retirement readiness to our more than 500,000 participants in over 1,000 retirement plans -- our clients include retirement plans, Taft-Hartley funds, government and public funds, not-for-profit organizations and family offices. BMO Global Asset Management's commitment to service excellence has led us to be recognized by Pension & Investments as one of the Top 100 largest asset managers.

We are a part of BMO Financial Group (NYSE: BMO), a fully diversified financial services firm with $555 billion total assets and more than 46,000 employees as of April 30, 2013.

BMO Retirement Services is a part of BMO Global Asset Management and a division of the BMO Harris Bank N.A., offering products and services through various affiliates of BMO Financial Group.

BMO Global Asset Management is the brand name for various affiliated entities of BMO Financial Group that provide trust, custody, securities lending, investment management, and retirement plan services. Certain of the products and services offered under the brand name BMO Global Asset Management are designed specifically for various categories of investors in a number of different countries and regions. Products and services are only offered to such investors in those countries and regions in accordance with applicable laws and regulations. BMO Financial Group is a service mark of Bank of Montreal (BMO). Investment products are: NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE

The results cited in this release are based on interviews with 416 retirement plan sponsors that have a minimum of $2 million in trust assets and use the BMO Retirement Services recordkeeping platform. The telephone and online survey was conducted between April 4, 2013 and May 12, 2013.

©2013 BMO Financial Corp.

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