During the recent market volatility, some larger defined contribution (DC) plan vendors experienced difficulty managing peak participant online access or transactional capabilities with their participant websites and/or trading platforms. And for all vendors, lean call center staffing models have led to longer wait times and higher call abandonment rates. Vendors report that during periods of market volatility, call-center volume generally increases between 10% and 33%. As call center staffing is based on historical volumes, these spikes impact participant interactions when those participants may already be feeling anxious or emotional.
According to the Employee Retirement Income Security Act (ERISA), which protects the retirement assets of plan participants, plan fiduciaries must “discharge their duties to the plan solely in the interest of the participants and beneficiaries, and for the exclusive purpose of providing for their benefits.” With the growing reliance on online portals for participant transactions and trade execution, it is important for ERISA plan fiduciaries to acknowledge and act on their inherent responsibilities to secure online access.
Vendors have reported that during periods of market turmoil, website traffic may double. Generally around a third occurs from participants checking their account balance only, not transacting in their account, but that activity leads to recordkeeper websites experiencing capacity issues. As markets pitched and rolled in February, a number of DC plan recordkeepers reported issues with logging on to their websites, conducting transactions, or trading within their brokerage solutions. These glitches may have short-term impacts but may also indicate a weakness in the organization’s technology capacity and redundancies.
Takeaway: Plan recordkeeper technology may not be adequate to support DC plans and participants during peak trading times in volatile markets.
Bottom Line: Plan sponsors would benefit from reviewing their vendor’s technology to confirm it is adequate to support the plan and participants. Additionally, we recommend plan sponsors review their service agreements to confirm the provisions in place for assigning roles and expectations in the event of technology failures.
