Majority of U.S. companies do not measure effectiveness of retirement plans for employees, Wells Fargo Survey Reveals

Less than half provide estimates of annual retirement income expected from plan balances
Only 5% of those surveyed say the new fee disclosure requirements will lead participants to “make better investment choices”

CHARLOTTE - April 19, 2012

Companies say they want to prepare employees for retirement, but far less than half are measuring whether employees are on track for an adequate ‘paycheck’ in retirement or taking steps to measure plan success, based on a Wells Fargo study of about 450 companies that sponsor 401(k) plans.

According to the 2011 Wells Fargo Retirement Plan Sponsor survey, 50% of companies have not measured their employees’ progress, while 32% say they are “analyzing plan participation, balances, and deferral rates.” Only 11% are measuring each employee’s retirement income and comparing it to expected needs; the majority (51%) do not provide employees with estimates of annual retirement income they can expect based on plan balances.

Yet, when asked “what is your primary goal for plan management in 2012?” well over half of the companies surveyed—63%—say it is either to educate employees about how much to save and overall retirement needs or to increase employee savings.

“Employers care about their employees’ ability to retire, but they are not taking enough steps to proactively assess if their employees have enough to retire,” said Joe Ready, co-director of Wells Fargo Institutional Retirement and Trust, the sixth largest institutional retirement provider in the United States. “Companies measure results all the time; they should treat this investment as they would any other corporate initiative and ask themselves if all the hard work and financial support is translating to better retirement readiness outcomes.”

Fee disclosures – what’s the impact?

Forty-eight percent of companies that sponsor 401(k) plans say the new requirements for fee disclosures to employees will “have little impact” on plan participants and 49% say “participants will be confused.” Only 5% say the requirements will lead participants to “make better investment choices.”

“We fully support fee transparency and have a strong history of doing so,” said Laurie Nordquist, co-director of Wells Fargo Institutional Retirement and Trust. “We want to make sure that when participants are looking at fees, they understand what they are seeing so they can make informed decisions. At Wells Fargo, we will take the required fee disclosures further and encourage the participant to take the next best step: whether that’s enrolling in the plan, increasing their contribution, or changing their investment mix.”

What are companies most concerned about?

Plan sponsors continue to rate market volatility as the biggest concern (53%) among the various participant retirement risks, played out in the general shift on the part of plan sponsors toward more conservative investments. Forty-two percent of employers surveyed are very concerned about participants not understanding retirement needs, and 40% are very concerned about participants’ ability to make savings last throughout retirement.

“The fact that plan sponsors worry more about market volatility as a threat to the retirement savings of their participants rather than participants’ lack of understanding retirement savings needs suggests plan sponsors don’t understand the root cause of the issue,” said Nordquist. “Participants are better positioned to ride out market cycles when they have a retirement strategy and plan linked to their goals. Understanding the importance of saving enough money each month and allocating investments in a way that is appropriate for age and risk tolerance will help employees weather short-term market volatility.”

The Wells Fargo Retirement Plan sponsor survey and its resulting analyses, Challenges and Risks Facing Plan Sponsors, are jointly developed and sponsored by Wells Fargo and its benefits consulting division, Bryan, Pendleton, Swats & McAllister, LLC (BPS&M). This is the 16th employee benefits survey analysis prepared by BPS&M. The survey analysis includes information on defined contribution and defined benefit plans. Boston Research Group facilitated the online survey during the fall of 2011. Data were collected from 452 employers from all types and sizes of organizations from around the country. Survey results can be obtained by contacting BPS&M at 800-222-5493 or

About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.3 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (, and other distribution channels across North America and internationally. With more than 270,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked No. 23 on Fortune’s 2011 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all its customers’ financial needs and help them succeed financially.

Leslie Ingberg

Jim Rowe