Dalbar Inc., a financial services research firm in Boston, is conducting what it calls an unprecedented study of the attitudes of retirement plan participants.
During the next three months, the firm will survey 35,000 plan participants in a bid to show banks and their competitors in the so-called defined-contribution plan market where their strengths and weaknesses lie, said Louis S. Harvey, Dalbar's president.
While complete results of the Dalbar study will be available only to subscribers to the report-at a base price of $18,000-general findings will be published in the fall.
The survey will include participants in the three major types of tax- advantaged retirement plans: 401(k), 403(b), and 457, which are for employees of corporations; nonprofits; and public education systems and state and local governments, respectively.
These plans enable workers to earmark a portion of pretax income-hence the term "defined contribution"-for retirement.
The study underscores the growing influence of plan participants in the booming defined-contribution arena, Mr. Harvey said.
"It is very clear that employers will fire a plan provider based on their employees' issues," Mr. Harvey said. "The seat of power is moving."
Assets in defined-contribution plans totaled $1.2 trillion at the end of 1995, according to the Investment Company Institute, and they are expected to top $2.7 trillion by 2000. Their growth is outstripping that of traditional pension programs, known as defined-benefit plans.
Participants typically have little or no involvement in choosing a retirement plan provider; that's up to the employer. But players in the retirement business say employees are becoming quite savvy about the plans.
"Over the last five years or so, the participants in 401(k)s have become much more demanding," said Thomas D. Hogan, executive vice president of Crestar Investment Group, the asset management arm of Crestar Financial Corp., Richmond, Va.
He said plan participants want better communication about results, educational materials, retirement planning kits-in short, "things that can help them make the investment selections."
Plan sponsors are asking providers like Crestar for more, too, Mr. Hogan said. At the request of its clients, for instance, Crestar is "playing a much more active role in the participant enrollment process," visiting work sites to talk about the advantages of joining the 401(k) plan.
Mr. Hogan said that while his company talks frequently to plan participants and sponsors and generally "stays out in front of them," it is constantly searching for more information about what's on their minds. Dalbar's survey of 35,000 participants could prove useful in that respect, he said, because "I've not seen any data that's been quite as massive as that."
The Dalbar study will gauge how comfortable workers are with various features of their retirement plans and whether they feel they are financially prepared for retirement, Mr. Harvey said in a telephone interview.
He added that he believes his is the first broad, customer-focused study covering the three major types of defined-contribution plans.
Mr. Harvey said the survey findings should help banks leverage their strengths in the retirement market, where they have lost market share to mutual funds.
"Banks have a very, very strong relationship with the consumer," he said. "This study has the potential to change the focus of marketing efforts from pleasing the plan sponsor to meeting the needs of the participant."
In an unusual twist, 10,000 of the plan participants included in the survey will be quizzed via America Online, Mr. Harvey said.
