Best Enrollment Kits Drive up Savings

Metlife, Vanguard, ING, Diversified and Hartford are recognized for increasing savings

(Boston, February 17, 2004) DALBAR’s most recent study, Qmax, shows that retirement plan enrollment kits make an enormous difference in employee savings rates. The best kits show a savings rate of 13% compared to an average kit with 10.6%. This difference shows that asset flows can increase 23% by using an effective kit. The study measures the effectiveness of kits in two ways, 1) the percent of employees enrolled and 2) the percent of salary deferred.

MetLife, Vanguard, and ING kits maximize enrollment; DALBAR, Diversified, Hartford and ING maximize deferrals into the plan. These kits display many of the strongest features that drive savings while avoiding the pitfalls that compromise effectiveness.

The Qmax report quantifies the impact of more than 60 enrollment kit features on enrollment and deferral rates. Qmax details best and worst features, including:

  • Features that MAXIMIZE ENROLLMENT – such as keeping plan policies in a document that is separate from the kit’s feature booklet.
  • Features that DECREASE ENROLLMENT – such as, provider differentiation (years in business, assets under management, number of participants served).
  • Features that MAXIMIZE DEFERRALS – such as, streamline navigation from opening the kit to the application with less content, fewer messages, minimal education of investing basics and fewer participant-completed worksheets.
  • Features that DECREASE DEFERRALS – such as, poor text style.

Enrollment kits have historically focused on achieving the optimum asset allocation for the participant. This practice is so prevalent, it is assumed to be requisite for 404(c) protection. “Unfortunately, the focus on asset allocation sacrifices deferral and enrollment rates,” warns DALBAR’s Laura Boothroyd. “Many providers forfeit assets and waste money on features that decrease participation. Moreover, when the kit hinders participation, 404c protection is threatened.”

Qmax methodology: Enrollment kits from participating providers were tested with a random sample of consumers who are representative of retirement plan participants. Additionally, kits were examined for the presence or absence of more than 60 distinct features. The design of the Qmax study controls for variables that are external to the enrollment kit so that only features contained in the kit are compared, measured and evaluated.

DALBAR, Inc., the nations leading financial-services market research firm, is committed to raising the standards of excellence in the financial-services industry. With offices in both the US and Canada, DALBAR develops standards for, and provides research, ratings, and rankings of intangible factors to the mutual fund, broker/dealer, discount brokerage, life insurance, and banking industries. They include investor behavior, customer satisfaction, service quality, communications, Internet services, and financial-professional ratings. Visit